UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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Apple Inc.
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Apple Inc.
Notice of 20202022 Annual Meeting of Shareholders and Proxy Statement
Attending the Annual Meeting – Advance Registration Required
We are pleased to welcome shareholders to Steve Jobs Theater at Apple Park for the 20202022 Annual Meeting. Due to the COVID-19 pandemic, the Annual Meeting will be held in a virtual format to provide a safe experience for our shareholders and employees.
To accommodate as many attendees as possible, we have established a registration process. Shareholdersattend, vote, and submit questions during the Annual Meeting visit www.virtualshareholdermeeting.com/AAPL2022 and enter the control number included in your Notice of Internet Availability of Proxy Materials, voting instruction form, or proxy card. Online access to the webcast will needopen approximately 15 minutes prior to registerthe start of the Annual Meeting. Attendance at the Annual Meeting is subject to capacity limits set by the virtual meeting platform provider. To submit questions in advance atof the Annual Meeting, visit proxyvote.com beginning atbefore 8:00 a.m.59 P.M. Pacific Time on February 4, 2020. Registration will be on a first-come, first-served basis. Only shareholders as ofMarch 3, 2022 and enter the Record Date who have registered in advance and have a valid confirmation of registration will be admitted to the meeting. Please note that due to space constraints and security concerns, we will not be able to provide access to the Annual Meeting or the Apple campus to any shareholders who have not registered in advance.control number.
Your proxy materials will include a unique control numbervote is important to be used atproxyvote.com to vote your shares and register to attend the meeting. If you have any questions aboutproxyvote.com or your control number, please contact the bank, broker, or other organization that holds your shares. The availability of online voting may depend on the voting procedures of the organization that holds your shares.
No recording is allowed at the Annual Meeting. This includes photography, audio recording, and video recording. In addition, the use of mobile phones, tablets, or computers is strictly prohibited. Attendees are welcome to visit the Apple Park Visitor Center after the Annual Meeting, but we are not able to accommodate tours of the campus.
us. Even if you receive a valid confirmation of registration and plan on attending the Annual Meeting, in person, we encourage you to vote your shares in advance using one of the methods described in this Proxy Statement to ensure that your vote will be represented at the Annual Meeting. We reserveTo vote online, visit proxyvote.com and enter the right to revoke admission privilegescontrol number found in your Notice of Internet Availability of Proxy Materials, or, to eject an attendee for behavior likely to cause damage, injury, disruption,if you requested printed copies of the proxy materials, you may vote by phone or annoyance or for failure to comply with reasonable requests orby mail. For more detailed information, see the rulessection entitled “Voting Procedures” beginning on page 107 of conductthe Proxy Statement.
Apple Inc.
Notice of 2022 Annual Meeting of Shareholders
Date and Time: | Virtual Meeting Site: | |
March 4, 2022 9:00 A.M. Pacific Time | www.virtualshareholdermeeting.com/AAPL2022 Who Can Vote: Shareholders of record at the close of business on January 3, 2022 |
Items of Business and Board Voting Recommendation
1 | Election of Directors: James Bell, Tim Cook, Al Gore, Alex Gorsky, Andrea Jung, Art Levinson, Monica Lozano, Ron Sugar, and Sue Wagner | FOR each of the nominees | ||
2 | Ratification of Appointment of Independent Registered Public Accounting Firm | FOR | ||
3 | Advisory Vote to Approve Executive Compensation | FOR | ||
4 | Approval of the Apple Inc. 2022 Employee Stock Plan | FOR | ||
5-10 | Shareholder Proposals if properly presented | AGAINST | ||
And such other business as may properly come before the Annual Meeting and any postponements or adjournments thereof. |
Sincerely, |
Katherine Adams Senior Vice President, General Counsel and Secretary |
Cupertino, California January 6, 2022 |
Important Notice Regarding the Availability of Proxy Materials for the meeting, including time limits applicableAnnual Meeting of Shareholders to attendees whobe held on March 4, 2022. The Notice of Meeting, Proxy Statement, and Annual Report on Form 10-K are permitted to speak.available free of charge at proxyvote.com and at investor.apple.com.
In this Proxy Statement, the terms “Apple,” “we,” and “our” refer to Apple Inc. Information presented in this Proxy Statement is based on Apple’s fiscal calendar.calendar, other than references to particular years in the section entitled “Advancing Apple Values,” in the biographies of our directors and executive officers, and in the opposition statements to the shareholder proposals which refer to calendar years. This Proxy Statement includes website addresses and references to additional materials found on those websites. These websites and materials are not incorporated in to this Proxy Statement by reference.
This document includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our environmental and social goals, commitments, and strategies. These statements involve risks and uncertainties. Actual results could differ materially from any future results expressed or implied by the forward-looking statements for a variety of reasons, including due to the risks and uncertainties that are discussed in our most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. We assume no obligation to update any forward-looking statements or information, which speak as of their respective dates.
These materials were first sent or made available to shareholders on January 3, 2020.6, 2022.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 1 |
Summary
This summary highlights our progress advancing Apple values, selected business results, and executive compensation and corporate governance information described in more detail in this Proxy Statement.
2 | Proxy Statement |
We are committed to demonstrating that business can and should be a force for good. Achieving that takes innovation, collaboration, and a focus on serving others. It also means leading with our values in the technology we make, the way we make it, and how we treat people and the planet we share. We’re always working to leave the world better than we found it, and to create powerful tools that empower others to do the same.
Below are some highlights of our progress towards advancing our values: accessibility, education, environment, inclusion and diversity, privacy, and supplier responsibility. More information is available at investor.apple.com/esg.
Accessibility | We create the most accessible products and services in the world – because technology for everyone should meet everyone’s needs. | |
Education | We believe education is a great equalizing force and a powerful source of opportunity for all. | |
Environment | We believe doing right by the planet is good for people, for communities, and for business. | |
Inclusion & Diversity | We’re committed to making our company more inclusive and diverse and the world more just. | |
Privacy | We believe privacy is a fundamental human right. | |
Supplier Responsibility | We set the highest standards for labor and human rights, working across our global supply chain to expand opportunity and empower people. |
Environment | ||
Teams across Apple are always innovating to make our products better for people and the planet—from the energy that powers our operations, to the materials in our devices, to the companies we do business with. We work with local communities to expand our impact, with a focus on equity and opportunity. Apple is already carbon neutral for our operations, and we’ve set a goal to be carbon neutral across our entire supply chain and the lifetime usage of our products by 2030. We’re also committed to one day making our products with only recycled and renewable materials. | Carbon Neutral for corporate operations since April 2020, using 100% renewable energy for all Apple facilities since 2018 40% reduction in carbon emissions from 2015 to 2020 175 Suppliers committed to 100% renewable energy, more than doubling the number of suppliers over the course of 2021 98% recycled rare earth elements in iPhone 13 devices | |
People in Our | ||
Everyone deserves to be treated with dignity and respect, and work in a safe and healthy environment. That’s why we set the highest standards for labor and human rights and work diligently to make sure they’re met. We also invest in the people across our global supply chain – with training and educational opportunities to help them achieve their goals. | 250,000+ supplier employees directly engaged about their workplace experiences in 2020 21.5 million supplier employees trained on their rights since 2008 1,121 supplier assessments conducted in 2020 in 53 countries to verify compliance with our Supplier Code of Conduct 100% of identified tin, tantalum, tungsten, gold, cobalt, and lithium smelters and refiners assessed through third-party audits | |
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 3 |
Our People | ||
We’ve strengthened our long-standing commitment to making our company more inclusive and the world more just. Where every great idea can be heard. And everybody belongs. We’re making progress toward building an Apple that represents the diverse world around us, and are taking meaningful actions to build more diverse representation across every part of the business. | 64% increase in U.S. employees from underrepresented communities from 2014 to 2020 | |
70% increase in global population of women at Apple from 2014 to 2020 | ||
Pay Equity achieved gender pay equity globally, as well as pay equity by race and ethnicity in the United States | ||
Zero Tolerance policy for harassment and discrimination | ||
Customers | ||
At Apple, our customers are at the center of everything we do. Living up to that commitment means staying true to the values that have defined Apple from the beginning. It means creating technology that is accessible for all people. It also means innovating to protect people’s privacy, which we believe is a fundamental human right. | People Detection Feature award winning health and safety technology for users who are blind and need to maintain social distancing | |
Assistive Touch to help users with limb differences navigate Apple Watch through new gestures | ||
App Store Privacy Nutrition Labels to drive all apps to help users understand how their data is handled | ||
App Tracking Transparency to give users a choice in how apps track and share their data for advertising | ||
Communities | ||
Leaving the world better than we found it means supporting communities globally with initiatives that advance equity and expand access to opportunity. Our Racial Equity and Justice Initiative is working to address systemic racism, while supporting opportunities for communities of color. This initiative builds on our long-standing commitment to education. Through our Community Education Initiative, we’re creating opportunities for tens of thousands of educators and students to learn skills like coding and unlock their creativity. | Racial Equity and Justice Initiative drives lasting change through $130M comittment to education, economic empowerment, and criminal justice reform | |
75+ Apps from Apple Entrepreneur Camp Black, Female, and Hispanic Founders and Developers have launched on the App Store | ||
Detroit Apple Developer Academy launched in collaboration with Michigan State University to offer new opportunities for careers in the iOS app economy | ||
Hispanic-Serving Equity Innovation Hub launched in partnership with the California State University to provide new educational pathways in science, technology, engineering, and math for students from Hispanic-serving institutions globally | ||
4 | Proxy Statement |
2021 Business Highlights
In 2021, we remained focused on creating the best technology for our customers—delivering our most powerful lineup of hardware, exciting new software features, and the most diverse range of services for our customers to choose from.
2021 All-time Net Sales Records In 2021, we set all-time records across each of our geographic segments and product categories. |
Geographic Segments | ||||||||
Americas $153.3B +23% Y/Y | Europe $89.3B +30% Y/Y | Greater China $68.4B +70% Y/Y | Japan $28.5B +33% Y/Y | Rest of APAC $26.4B +35% Y/Y |
Product Categories | ||||||||
iPhone $192.0B +39% Y/Y | Mac $35.2B +23% Y/Y | iPad $31.9B +34% Y/Y | Wearables, Home $38.4B +25% Y/Y | Services $68.4B +27% Y/Y |
For a detailed discussion of our financial results for 2021, see our Annual Report on Form 10-K for the year ended September 25, 2021.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 5 |
Executive Compensation
Our executive compensation program is designed to motivate and reward outstanding performance and retain strong leadership.
We pay for performance and manage Apple Inc.for the long-term
Effective Design | • Competitive compensation commensurate with Apple’s size, performance, and profitability • Clear guiding principles and sound compensation policies and practices • Aligned with shareholders’ interests | |
Pay for Performance | • Majority of our named executive officers’ compensation is performance-based • Short-term cash incentive is tied to rigorous annual net sales and operating income goals with a modifier based on Apple values and key community initiatives • Performance-based equity awards are earned at the target level only if our total shareholder return is above the 55th percentile relative to other S&P 500 companies for the applicable performance period |
2021 Summary
Outstanding Results. The 2021 compensation earned by our named executive officers reflects our record-breaking net sales and operating income results and outstanding total shareholder return performance across applicable performance periods. Exceptional Leadership. In 2021 we marked the 10th anniversary of Tim Cook’s leadership as CEO. It’s been a remarkable decade for Apple and in 2021 Mr. Cook was granted an equity award for the first time since he was promoted to CEO in August 2011. The structure of this award is better aligned with the performance-based and time-based RSUs awarded to our other named executive officers, while the amount recognizes his exceptional leadership and is commensurate with the size, performance, and profitability Apple has achieved during his tenure. | ||||
For a detailed discussion of our executive compensation program and the 2021 compensation of our named executive officers, see the section entitled “Compensation Discussion and Analysis” beginning on page 36.
6 | Proxy Statement |
Apple’s Board of Directors
Board Diversity
Name |
| Independent | Age | Director | Audit Committee | Compensation Committee | Nominating Committee | |||||||||||||||||||||||||
Art Levinson Chair | Founder and | 71 | 2000 |
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Tim Cook | CEO, Apple |
| 61 | 2011 |
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James Bell | Former CFO and | 73 | 2015 | · |
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Al Gore | Former Vice President | 73 | 2003 |
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Alex Gorsky | Executive Chair, | 61 | 2021 |
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Andrea Jung | President and CEO, | 63 | 2008 |
| Chair | · | ||||||||||||||||||||||||||
Monica Lozano | President and CEO, | 65 | 2021 | · |
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Ron Sugar | Former Chair and CEO, | 73 | 2010 | Chair |
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Sue Wagner | Co-founder and | 60 | 2014 | · |
| Chair |
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 7 |
Corporate Governance Best Practices
Apple’s Board oversees the CEO and other senior management in the competent and ethical operation of Apple on a day-to-day basis and assures that the long-term interests of shareholders are being served.
Board Composition and Independence • All directors except CEO are independent • Separation of the Chair and CEO roles • 100% independent committees • Executive sessions provided for all quarterly Board and committee meetings • Mandatory retirement age • Limits on board member service on other public company boards • Board has significant interaction with senior management and access to other employees | Board and Committee Practices • Annual Board and committee evaluations, including one-on-one interviews led by the Chair • Director orientation and continuing education • All members of the Audit Committee are financial experts • 100% attendance by directors at Board and committee meetings in 2021 • Commitment to actively seeking highly qualified women and individuals from underrepresented communities as potential nominees • Robust stock ownership guidelines | Shareholder Rights • Single class of stock with equal voting rights • Annual elections for all directors • Majority voting standard for uncontested elections of directors • Proxy access for shareholders • Special meeting and written consent rights for shareholders |
Effective Board Oversight of Risk Management
To serve the long-term interests of our shareholders, our Board oversees management’s identification, assessment, and mitigation of risks related to our company, business, and people.
Selected Areas of Board and Committee Oversight in 2021
Board of Directors
• Corporate and Product Strategy | • Inclusion and Diversity | • Operations | ||
• Environment and Climate | • Human Rights | • COVID-19 Response | ||
• Legal and Regulatory Compliance | • Board and Executive Succession | • Privacy and Data Security |
Audit Committee • Enterprise Risk Management • Legal and Regulatory • Finance, Treasury, and Tax • Privacy and Data Security • Community Investments • Lobbying Expenditures | Compensation Committee • Executive Compensation • People and Benefits • Equity Compensation Plans | Nominating Committee • Board Succession Planning • Environmental, Social, and • Shareholder Engagement | ||||||
For more detailed information on Apple’s corporate governance and risk oversight framework, see the section entitled “Corporate Governance” beginning on page 9.
10 | Proxy Statement |
Role of the Board of Directors
Apple’s Board oversees the CEO and other senior management in the competent and ethical operation of Apple on a day-to-day basis and assures that the long-term interests of shareholders are being served. To satisfy the Board’s duties, directors are expected to take a proactive, focused approach to their positions to ensure that Apple is committed to business success through the maintenance of high standards of responsibility and ethics.
Board Meetings and Attendance
The Board met five times during 2021 with each member of the Board serving at the time attending all of the meetings.
Apple expects all of its directors to attend the Annual Meeting. All directors serving at the time attended the 2021 annual meeting of shareholders.
Board Independence and Qualifications
The Board has determined that all Board members, other than Mr. Cook, are independent under applicable rules of The Nasdaq Stock Market LLC (“Nasdaq”).
Apple’s Board has a standing Audit and Finance Committee (the “Audit Committee”), Compensation Committee, and Nominating and Corporate Governance Committee (the “Nominating Committee”). The Board has determined that all committee members are independent under applicable Nasdaq and Securities and Exchange Commission (“SEC”) rules for committee memberships, and that each member of the Audit Committee also meets the additional independence criteria set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
The Board has also determined that each Audit Committee member qualifies as an “audit committee financial expert” as that term is defined under SEC rules.
Board and Committee Structure
Apple regularly reviews the Board’s leadership structure and the responsibilities and composition of its standing committees. The structure and composition of Apple’s Board and its committees are intended to leverage the diverse perspectives of the Board members and promote effective oversight.
The Board believes that its current leadership structure, in which the roles of Chair and CEO are separated, best serves the Board’s ability to carry out its roles and responsibilities on behalf of Apple’s shareholders, including its oversight of management, and Apple’s overall corporate governance. The Board also believes that the current structure allows our CEO to focus on managing Apple, while leveraging our independent Chair’s experience to drive accountability at the Board level.
The current membership and function of each standing committee is described below. Each committee operates under a written charter adopted by the Board, which is available at investor.apple.com/leadership-and-governance. Each committee reviews and assesses its charter annually.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 11 |
Audit Committee Ron Sugar (Chair) James Bell Monica Lozano Sue Wagner Eight meetings during 2021 100% attendance Audit Committee Report: page 100 | The Audit Committee assists the Board in oversight and monitoring of Apple’s financial statements and other financial information provided by Apple to its shareholders and others; compliance with legal, regulatory, and public disclosure requirements; the independent auditors, including their qualifications and independence; Apple’s systems of internal controls, including the internal audit function; treasury and finance matters; enterprise risk management; privacy and data security; and the auditing, accounting, and financial reporting process generally. The Audit Committee also appoints Apple’s independent registered public accounting firm and pre-approves the services performed by such firm. | |
Compensation Committee Andrea Jung (Chair) Al Gore Art Levinson Five meetings during 2021 100% attendance Compensation Committee Report: page 49 | The Compensation Committee reviews and approves the compensation arrangements for the CEO, Apple’s other executive officers, and, to the extent it deems appropriate, other employees; administers Apple’s equity compensation plans; reviews and makes recommendations to the Board regarding the compensation of members of the Board and Board committees; and performs such other duties and responsibilities as set forth in its charter. The Compensation Committee may delegate its authority under its charter to Apple’s officers or employees, or any of the members of the Compensation Committee, except to the extent otherwise prohibited by applicable law, or SEC or Nasdaq rules. The Compensation Committee’s authority to grant equity awards or to take any other action with respect to equity awards (other than the performance of ministerial duties) may not be delegated to Apple’s management or others. For a description of the Compensation Committee’s processes and procedures, including the roles of its independent compensation consultant and the CEO in support of the Compensation Committee’s decision-making process, see the section entitled “Compensation Discussion and Analysis” beginning on page 36. | |
Nominating Committee Sue Wagner (Chair) Al Gore Alex Gorsky Andrea Jung Six meetings during 2021 100% attendance | The Nominating Committee’s duties and responsibilities include assisting the Board on matters relating to the identification, selection, and qualification of Board members and candidates nominated to the Board; making recommendations to the Board concerning the size, structure, and composition of the Board and its committees; and overseeing and making recommendations regarding corporate governance matters, including Apple’s Corporate Governance Guidelines. The Nominating Committee is committed to actively seeking out highly qualified women and individuals from underrepresented communities to include in the pool from which Board candidates are chosen. The Nominating Committee also oversees the annual Board performance self-evaluation process. The Nominating Committee has evaluated and recommended to the full Board each of the nominees named in this Proxy Statement for election to the Board. See the section entitled “Directors” beginning on page 21. |
12 | Proxy Statement |
Self-Evaluations
The Board conducts an annual self-evaluation to assess whether the Board, its committees, and each member of the Board are working effectively together, and to provide an opportunity to reflect upon, and improve, processes and effectiveness.
The Nominating Committee designs and establishes the overall evaluation framework, and Dr. Levinson, the independent Chair of the Board, leads the evaluation interviews and feedback. Dr. Levinson conducts one-on-one discussions with each director to obtain their assessment of the effectiveness and performance of the Board and its committees. Additional discussion topics include Board and committee composition and refreshment; timing, agenda, and content of Board and committee meetings; Board dynamics and function; peer reviews of other members; and executive succession planning. Board members are also invited to discuss the performance of Dr. Levinson directly with the Chair of the Nominating Committee. A summary of the results is presented to the Board on an anonymous basis, identifying any themes or issues that have emerged.
Each committee conducts its own annual self-evaluation and reports the results to the Board. Each committee’s evaluation also includes an assessment of the committee’s compliance with Apple’s Corporate Governance Guidelines and the committee’s charter.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 13 |
Corporate Governance Policies and Practices
Apple’s governance framework is based on a commitment to sound policies and practices.
| We have a single class of shares with equal voting rights. | |
Annual director | All directors are elected annually for a one-year term. | |
Majority voting | We have a majority voting standard for uncontested elections of directors. | |
Proxy access | Up to 20 shareholders owning at least 3% of shares continuously for three years may nominate up to 20% of our Board. | |
Special meetings | Shareholders owning at least 10% of our outstanding shares have the right to call a special meeting of the shareholders. | |
Separation of Chair | Our CEO is focused on managing Apple and our independent Chair drives accountability at the Board level. | |
Financial expertise | All members of our Audit Committee qualify as audit committee financial experts. | |
Prohibitions on hedging, pledging, and other transactions | We prohibit short sales, transactions in derivatives, and hedging of Apple securities by directors, executive officers, and employees; and prohibit pledging of Apple securities by directors and executive officers. | |
Stock ownership | We have robust stock ownership guidelines for our directors and executive officers. | |
Succession planning | Our Board regularly reviews Board and executive succession planning. | |
Continuing education | Our Board regularly receives training and updates on ethics, compliance, and governance. | |
Board and committee | Our Board and committees conduct annual performance self-evaluations led by our independent Chair, including one-on-one interviews. |
14 | Proxy Statement |
The Board takes an active role in overseeing corporate and product strategy and seeks to ensure that the long-term interests of Apple and its shareholders are being served.
Board Oversight of Apple’s Values and Our People
Throughout the year, the Board and its committees review and discuss with management progress relating to Apple’s values: accessibility, education, environment, inclusion and diversity, privacy, and supplier responsibility. The Board and its committees also review and discuss with management matters related to our people, including Apple’s commitments and progress towards inclusive and diverse representation among our employees, employee engagement, compensation and benefits, business conduct and compliance, and executive succession planning.
In 2020, the Board adopted Apple’s human rights policy—Our Commitment to Human Rights—on behalf of Apple. The policy governs how we treat everyone, including our customers, employees, business partners, and people at every level of our supply chain. Apple identifies salient human rights risks through internal risk assessments and external industry-level third-party audits. Additionally, the policy stipulates that Apple maintains active communication channels with rightsholders and other stakeholders. The Board is responsible for overseeing and periodically reviewing our Human Rights Policy. Apple’s General Counsel is responsible for its implementation, and reports to the Board and its committees on our progress and significant issues identified during the diligence process.
At the onset of the COVID-19 global pandemic, Apple management activated company-wide structures to assess, respond to, and mitigate adverse impacts, including enhanced health and safety measures for our people and the people in our supply chain. During 2021, the Board and its committees continued to review and discuss with management the assessment and mitigation of the impact of COVID-19 on Apple’s employees, supply chain, and business.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 15 |
Board Oversight of Risk Management
The Board believes that evaluating the executive team’s management of the risks confronting Apple is one of its most important areas of oversight. In carrying out this responsibility, the Board is assisted by each of its committees that considers risks within its areas of responsibility and apprises the full Board of significant matters and management’s response.
Board of Directors
Directly oversees corporate and product strategy, executive succession planning, and other matters reserved to the full Board
Reviews and discusses with management significant risks affecting Apple including matters escalated by its committees from within their respective areas of direct oversight
Audit Committee Primary responsibility for assisting the Board with risk oversight | Compensation Oversight of the design and administration of compensation programs and policies | Nominating Oversight of Board structure, governance, and independence |
Management Led by our CEO and executive team, implements and supervises day-to-day risk management processes and reports to the Board and its committees on significant matters |
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Enterprise Risk Management Program Designed to identify, assess, monitor, manage, and mitigate Apple’s significant business risks, including financial, operational, compliance, and reputational risks. In 2021, key areas of focus included health and safety, environment, people, privacy and data security, supply chain and operations, and legal and regulatory risks, including antitrust matters. The Risk Oversight Committee, comprised of our Chief Financial Officer, General Counsel, Head of Business Assurance, and other senior business leaders, assists the Audit Committee with its general responsibility for overseeing enterprise risk management. | Internal Audit Designed to identify and help mitigate risk, and improve the company’s overall internal controls. Internal Audit is directly overseen by the Audit Committee and operates pursuant to a charter, which is reviewed and approved annually by the Audit Committee. |
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Record DateEnvironment. The Board reviews and discusses updates on environmental matters with Apple’s Vice President of Environment, Social, and Policy Initiatives, who is responsible for the development, review, and execution of plans designed to minimize Apple’s impact on the environment. These reports include Apple’s progress towards environmental and climate goals and the environmental impact of our products and operations.
CloseLegal and Regulatory. Together with the Audit Committee, Apple’s Board takes an active role in overseeing legal and regulatory risks related to Apple’s business. The Board receives regular updates from Apple’s General Counsel and Apple’s Chief Compliance Officer on legal and regulatory developments affecting the company, including updates on legislative developments, government investigations, litigation, and other legal proceedings.
Supply Chain. The Board reviews and discusses with management reports regarding Apple’s supply chain and operations. These reports include updates from Apple’s Senior Vice President, Operations, on supply constraints, supply chain diversification, and our program to oversee Apple’s Supplier Code of businessConduct and Supplier Responsibility Standards. Apple reports publicly on January 2, 2020its efforts and progress in the critical work of protecting people and the planet across its supply chain through an annual People and Environment in Our Supply Chain report.
Selected Areas of Nominating Committee Oversight
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Your voteBoard Succession Planning. Apple’s Nominating Committee is important. Please vote.responsible for assessing the Board’s composition to ensure Apple has the mix of skills, experiences, and diversity necessary to promote Board effectiveness. The Nominating Committee oversees board succession planning, recruitment of potential candidates, and the Board’s self-evaluation process.
Selected Areas of Compensation Committee Oversight
Executive Compensation. Apple’s Compensation Committee ovesees risks related to Apple’s compensation programs. Each year, the Compensation Committee evaluates whether the design and operation of Apple’s compensation programs or policies encourage our executive officers or our employees to take unnecessary or excessive risks. In establishing and reviewing Apple’s compensation programs for risk, the Compensation Committee considers program features that mitigate against potential risks for our executive officers, such as fixed base salaries; goals that are tied to specific company financial measures and payout caps for the annual cash incentive program; clawbacks for our cash and equity incentives; the quantity and mix of long-term performance-based and time-based equity incentives; and stock ownership requirements. The Compensation Committee also generally considers the program features that mitigate potential risks for our non-executive officer employees. In its annual review, the Compensation Committee concluded that Apple’s executive compensation programs and policies continue to provide an effective and appropriate mix of incentives to help ensure performance is focused on long-term shareholder value creation, and do not encourage short-term risk taking at the expense of long-term results or create risks that are reasonably likely to have a material adverse effect on Apple.
Apple Inc. | 2020
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 17 |
Selected Areas of Audit Committee Oversight
Antitrust Compliance. The Audit Committee oversees Apple’s antitrust compliance program. Apple’s Antitrust Compliance Officer is responsible for the development, review, and execution of Apple’s Antitrust Compliance Program and, together with Apple’s General Counsel and Apple’s Chief Compliance Officer, regularly reports to the Audit Committee. These reports include the alignment of the program with Apple’s potential antitrust risks, and the effectiveness of the program’s design in detecting and preventing antitrust issues and promoting compliance with laws and Apple’s policies.
Business Conduct and Global Compliance. The Audit Committee regularly reviews and discusses with management Apple’s business conduct and compliance risks. Apple’s Chief Compliance Officer is responsible for the development, review, and execution of Apple’s Business Conduct and Global Compliance program and regularly reports to the Audit Committee. These reports include the program’s support and validation of Apple’s principles of conducting business ethically, honestly, and in compliance with applicable laws; the effectiveness of the program’s design in detecting and preventing business conduct violations, and promoting ethical business conduct and compliance with applicable laws and Apple policies; as well as results of program evaluations.
Privacy and Data Security. The Audit Committee oversees Apple’s management of privacy and data security risks. The Audit Committee reviews reports on privacy and data security matters from Apple’s General Counsel, and from the heads of Information Security, Business Conduct and Compliance, Business Assurance, and Internal Audit. These reports include updates on Apple’s privacy program, cybersecurity risks, risk management, and relevant legislative, regulatory, and technical developments. Apple also has a management Privacy Steering Committee chaired by Apple’s General Counsel, with members including Apple’s Senior Vice President of Machine Learning and AI Strategy, Senior Vice President of Software, and a cross functional group of senior representatives from Services, Software Engineering, Product Marketing, Corporate Communications, Information Services & Technology, Information Security, Privacy Legal, and the Head of Business Assurance. The Privacy Steering Committee sets privacy standards for teams across Apple and acts as an escalation point for addressing privacy compliance issues for decision or further escalation.
Tax. The Audit Committee reviews reports on tax matters from Apple’s Chief Financial Officer, General Counsel, the heads of global Tax, Business Assurance, and Internal Audit, and from Apple’s independent auditor. These reports include updates on significant domestic and international tax-related developments, worldwide tax audits, international tax structure, international tax policy, and other tax-related legislative matters.
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TableTransparency and Engagement
Reporting
Apple publicly discloses information about our business across a number of Contentstopics. This includes our reports on Environmental Progress, People and Environment in Our Supply Chain, and Privacy Transparency, which detail our commitments, programs, and progress on these matters.
In 2021, in response to stakeholder feedback, Apple extended its commitment to transparency with enhanced reporting including Apple’s first Environment, Social and Governance Report (“ESG Report”), which seeks to provide a broad view of our environmental, social, and governance efforts across the company.
We’ve also created a comprehensive index that maps our environmental, social, and governance disclosures (“ESG Index”) across metrics outlined in the Global Reporting Initiative (“GRI”), Sustainability Accounting Standards Board (“SASB”) and the Task Force on Climate-Related Financial Disclosures (“TCFD”) voluntary disclosure frameworks. The ESG Report and ESG Index are available at investor.apple.com/esg.
Shareholder Engagement
We proactively engage with shareholders and other stakeholders throughout the year to learn their perspectives on significant issues, including company performance and strategy, corporate governance, executive compensation, and environmental, social, and governance topics. This engagement helps us better understand shareholder priorities and perspectives, gives us an opportunity to elaborate upon our initiatives with relevant experts, and fosters constructive dialogue. We take feedback and insights from our engagement with shareholders and other stakeholders into consideration as we review and evolve our practices and disclosures, and further share them with our Board as appropriate. Since the date of the 2021 annual meeting of shareholders to the date of this Proxy Statement, management engaged shareholders representing more than a majority of shares held by institutional shareholders, based on the number of institutional shares reported as of September 30, 2021, the latest date that information is available prior to the filing of this Proxy Statement.
Communications with the Board
Any matter intended for the Board, or for any individual member of the Board, should be directed to Apple’s Secretary at One Apple Park Way, MS: 927-4GC, Cupertino, CA 95014 USA, with a request to forward the communication to the intended recipient. In general, any shareholder communication delivered to Apple for forwarding to Board members will be forwarded in accordance with the shareholder’s instructions. Apple reserves the right not to forward to Board members any abusive, threatening, or otherwise inappropriate materials.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 19 |
Policy on Related Party Transactions
The Board has adopted a written policy for approval of transactions between Apple and its directors, director nominees, executive officers, greater than 5% beneficial owners of Apple’s common stock or any other class of Apple’s equity securities, and each of their respective immediate family members, where the amount involved in the transaction exceeds or is reasonably expected to exceed $120,000 in a single fiscal year and the related party has or will have a direct or indirect interest in the transaction (other than solely as a result of being a director or less than 10% beneficial owner of another entity). A copy of this policy is available at investor.apple.com/leadership-and-governance. The policy provides that the Audit Committee reviews transactions subject to the policy and determines whether or not to approve or ratify those transactions. Certain types of transactions are deemed pre-approved pursuant to standing pre-approval guidelines established by the Audit Committee. In addition, the Audit Committee has delegated authority to its Chair to pre-approve or ratify transactions under certain circumstances. A summary of new transactions covered by standing pre-approvals or transactions approved or ratified by the Chair of the Audit Committee, if any, is provided to the Audit Committee for its review.
In reviewing transactions subject to the policy, the Audit Committee or the Chair of the Audit Committee, as applicable, considers among other factors it deems appropriate:
The nature and extent of the related person’s interest in the transaction;
The approximate dollar value of the amount involved in the transaction;
The approximate dollar value of the amount of the related person’s interest in the transaction without regard to the amount of any profit or loss;
Whether the transaction was undertaken in the ordinary course of Apple’s business;
The material terms of the transaction, including whether the transaction with the related person is proposed to be, or was entered into, on terms no less favorable to Apple than terms that could have been reached with an unrelated third-party;
The business purpose of, and the potential benefits to Apple of, the transaction;
Whether the transaction would impair the independence of a non-employee director;
Required public disclosure, if any; and
Any other information regarding the transaction or the related person in the context of the proposed transaction that would be material to the Audit Committee’s decision, in its business judgment, in light of the circumstances of the particular transaction.
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Transactions with Related Parties
Several of Apple’s Board members and executive officers serve as directors or executive officers of other organizations, including organizations with which Apple has commercial and charitable relationships. Apple does not believe that any director had a direct or indirect material interest in any such relationships during 2021 and through the date of this Proxy Statement.
Governance Documents
Apple’s key governance documents, including our Corporate Governance Guidelines, are available at investor.apple.com/leadership-and-governance.
Business Conduct Policy
Apple seeks to conduct business ethically, honestly, and in compliance with laws. Apple’s code of ethics, titled “Business Conduct: The way we do business,” set outs the principles that guide Apple’s business practices – honesty, respect, confidentiality, and compliance. The code applies to all employees, including Apple’s principal executive officer, principal financial officer, and principal accounting officer. Relevant sections of the code also apply to the Board. Apple expects its suppliers, contractors, consultants, and other business partners to follow the principles set forth in the code when providing goods and services to Apple or acting on its behalf. The code is available at apple.com/compliance/pdfs/Business-Conduct-Policy.pdf. Apple intends to disclose any changes or waivers from this code by posting such information to our website if such disclosure is required by SEC or Nasdaq rules.
Apple’s code is managed by the Business Conduct organization, under the oversight of Apple’s Chief Compliance Officer. Employees are required to complete training on the code upon joining Apple and annually thereafter. With input from relevant stakeholders and executive leadership, we regularly review and update Apple’s code and related policies to ensure they provide clear, actionable guidance to our employees, executive officers, and directors.
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Board Composition and Refreshment
Apple’s Board consists of a diverse group of highly qualified leaders in their respective fields. All of our directors have senior leadership experience at large domestic and multinational companies. In these positions, they have gained significant and diverse management experience, including strategic and financial planning, public company financial reporting, compliance, risk management, and leadership development. They also have in-depth public company experience serving as executive officers, or on boards of directors and board committees, and have a robust understanding of corporate governance practices and trends. In addition, many of our directors have experience as directors or trustees of significant academic, research, nonprofit, and philanthropic institutions, and bring unique perspectives to the Board.
The Board and the Nominating Committee believe the skills, qualities, attributes, and experiences of our directors provide Apple with business acumen and a diverse range of perspectives to effectively address Apple’s evolving needs and represent the best interests of Apple’s shareholders.
The Nominating Committee considers candidates for director who are recommended by its members, by other Board members, by shareholders, and by management, as well as those identified by third-party search firms retained to assist in identifying and evaluating possible candidates. In evaluating potential nominees to the Board, the Nominating Committee considers, among other things: independence; character; ability to exercise sound judgment; diversity; age; demonstrated leadership; and relevant skills and experience, including financial literacy, antitrust compliance, and other experience in the context of the needs of the Board. The Nominating Committee is committed to actively seeking out highly-qualified women and individuals from underrepresented communities to include in the pool from which Board nominees are chosen. Additionally, the Nominating Committee has instructed its third-party search firms to ensure that diverse candidates are included in slates of potential nominees.
The Nominating Committee, with the assistance of an outside search firm, and input from our independent directors, Chair of the Board, and CEO, identified Alex Gorsky as a potential candidate for election to the Board. The Nominating Committee has evaluated and recommended to the full Board each of the nominees named in this Proxy Statement for election to the Board.
The Nominating Committee evaluates candidates recommended by shareholders using the same criteria as for other candidates recommended by its members, other members of the Board, or other persons. Shareholders who wish to recommend a director candidate should submit the candidate’s name and background information in writing to our Secretary at One Apple Park Way, MS: 927-4GC, Cupertino, CA 95014 USA. In addition, our bylaws provide that a shareholder, or a group of up to 20 shareholders, owning at least 3% of our outstanding shares continuously for at least three years, may nominate director nominees constituting up to 20% of Apple’s Board for inclusion in our proxy statement pursuant to our proxy access provisions. Nominating shareholders and nominees must satisfy the requirements set forth in our bylaws, which can be found at investor.apple.com/leadership-and-governance.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 23 |
The following matrix highlights the mix of key skills, qualities, attributes, and experiences of the nominees that, among other factors, led the Board and the Nominating Committee to recommend these nominees for election to the Board. The matrix is intended to depict notable areas of focus for each director, and not having a mark does not mean that a particular director does not possess that qualification or skill. Nominees have developed competencies in these skills through education, direct experience, and oversight responsibilities. The demographic information presented below is based on voluntary self-identification by each nominee. Additional biographical information on each nominee is set out below starting on page 24.
Director Skills and Demographic Matrix
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Apple Inc. | 2020 Proxy Statement
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Apple Inc. | 2020 Proxy Statement
Apple Inc. | 2020 Proxy Statement | 2
Annual Meeting
2020 Annual Meeting of Shareholders
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The Record Date for the Annual Meeting is January 2, 2020. Only shareholders of record as of the close of business on this date are entitled to vote at the Annual Meeting.
Items of Business and Voting Recommendation
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Election of Directors
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Ratification of Appointment of Independent Registered Public Accounting Firm
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Advisory Vote to Approve Executive
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Shareholder Proposal Shareholder Proxy Access Amendments
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Shareholder Proposal Sustainability and Executive Compensation
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Shareholder Proposal Policies on Freedom of Expression
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How to Vote
To vote online, visitproxyvote.com and enter the control number found in your Notice of Internet Availability.
You may also vote prior to the Annual Meeting by phone or by mail, or in person at the Annual Meeting if you have registered in advance and have a valid confirmation of registration. For more detailed information, see Voting Procedures beginning on page 76.
Your vote is important. Please vote.
Apple Inc. | 2020 Proxy Statement | 3
Leadership
Corporate GovernanceAudit Committee
Our• Enterprise Risk Management
• Legal and Regulatory
• Finance, Treasury, and Tax
• Privacy and Data Security
• Community Investments
• Lobbying Expenditures
Compensation Committee
• Executive Compensation
• People and Benefits
• Equity Compensation Plans
Nominating Committee
• Board Succession Planning
• Environmental, Social, and
Governance Reporting
• Shareholder Engagement
For more detailed information on Apple’s corporate governance and risk oversight framework, see the section entitled “Corporate Governance” beginning on page 9.
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Role of the Board of Directors
Apple’s Board oversees the CEO and other senior management in the competent and ethical operation of Apple on a day-to-day basis and assures that the long-term interests of shareholders are being served. To satisfy the Board’s duties, directors are expected to take a proactive, focused approach to their positions to ensure that Apple is committed to business success through the maintenance of high standards of responsibility and ethics.
Board Meetings and Attendance
The Board met five times during 2021 with each member of the Board serving at the time attending all of the meetings.
Apple expects all of its directors to attend the Annual Meeting. All directors serving at the time attended the 2021 annual meeting of shareholders.
Board Independence and Qualifications
The Board has determined that all Board members, other than Mr. Cook, are independent under applicable rules of The Nasdaq Stock Market LLC (“Nasdaq”).
Apple’s Board has a standing Audit and Finance Committee (the “Audit Committee”), Compensation Committee, and Nominating and Corporate Governance Committee (the “Nominating Committee”). The Board has determined that all committee members are independent under applicable Nasdaq and Securities and Exchange Commission (“SEC”) rules for committee memberships, and that each member of the Audit Committee also meets the additional independence criteria set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
The Board has also determined that each Audit Committee member qualifies as an “audit committee financial expert” as that term is defined under SEC rules.
Board and Committee Structure
Apple regularly reviews the Board’s leadership structure and the responsibilities and composition of its standing committees. The structure and composition of Apple’s Board and its committees are intended to leverage the diverse perspectives of the Board members and promote effective oversight.
The Board believes that its current leadership structure, in which the roles of Chair and CEO are separated, best serves the Board’s ability to carry out its roles and responsibilities on behalf of Apple’s shareholders, including its oversight of management, and Apple’s overall corporate governance. The Board also believes that the current structure allows our CEO to focus on managing Apple, while leveraging our independent Chair’s experience to drive accountability at the Board level.
The current membership and function of each standing committee is described below. Each committee operates under a written charter adopted by the Board, which is available at investor.apple.com/leadership-and-governance. Each committee reviews and assesses its charter annually.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 11 |
Audit Committee Ron Sugar (Chair) James Bell Monica Lozano Sue Wagner Eight meetings during 2021 100% attendance Audit Committee Report: page 100 | The Audit Committee assists the Board in oversight and monitoring of Apple’s financial statements and other financial information provided by Apple to its shareholders and others; compliance with legal, regulatory, and public disclosure requirements; the independent auditors, including their qualifications and independence; Apple’s systems of internal controls, including the internal audit function; treasury and finance matters; enterprise risk management; privacy and data security; and the auditing, accounting, and financial reporting process generally. The Audit Committee also appoints Apple’s independent registered public accounting firm and pre-approves the services performed by such firm. | |
Compensation Committee Andrea Jung (Chair) Al Gore Art Levinson Five meetings during 2021 100% attendance Compensation Committee Report: page 49 | The Compensation Committee reviews and approves the compensation arrangements for the CEO, Apple’s other executive officers, and, to the extent it deems appropriate, other employees; administers Apple’s equity compensation plans; reviews and makes recommendations to the Board regarding the compensation of members of the Board and Board committees; and performs such other duties and responsibilities as set forth in its charter. The Compensation Committee may delegate its authority under its charter to Apple’s officers or employees, or any of the members of the Compensation Committee, except to the extent otherwise prohibited by applicable law, or SEC or Nasdaq rules. The Compensation Committee’s authority to grant equity awards or to take any other action with respect to equity awards (other than the performance of ministerial duties) may not be delegated to Apple’s management or others. For a description of the Compensation Committee’s processes and procedures, including the roles of its independent compensation consultant and the CEO in support of the Compensation Committee’s decision-making process, see the section entitled “Compensation Discussion and Analysis” beginning on page 36. | |
Nominating Committee Sue Wagner (Chair) Al Gore Alex Gorsky Andrea Jung Six meetings during 2021 100% attendance | The Nominating Committee’s duties and responsibilities include assisting the Board on matters relating to the identification, selection, and qualification of Board members and candidates nominated to the Board; making recommendations to the Board concerning the size, structure, and composition of the Board and its committees; and overseeing and making recommendations regarding corporate governance
The Nominating Committee has evaluated and recommended to the full Board each of the nominees named in this Proxy Statement for election to the Board. See the section entitled “Directors” beginning on page 21. |
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Self-Evaluations
The Board conducts an annual self-evaluation to assess whether the Board, its committees, and each member of the Board are working effectively together, and to provide an opportunity to reflect upon, and improve, processes and effectiveness.
The Nominating Committee designs and establishes the overall evaluation framework, and Dr. Levinson, the independent Chair of the Board, leads the evaluation interviews and feedback. Dr. Levinson conducts one-on-one discussions with each director to obtain their assessment of the effectiveness and performance of the Board and its committees. Additional discussion topics include Board and committee composition and refreshment; timing, agenda, and content of Board and committee meetings; Board dynamics and function; peer reviews of other members; and executive succession planning. Board members are also invited to discuss the performance of Dr. Levinson directly with the Chair of the Nominating Committee. A summary of the results is presented to the Board on an anonymous basis, identifying any themes or issues that have emerged.
Each committee conducts its own annual self-evaluation and reports the results to the Board. Each committee’s evaluation also includes an assessment of the committee’s compliance with Apple’s Corporate Governance Guidelines and the committee’s charter.
• Annual elections for all directors so that director terms are not staggered
• Majority voting standard for uncontested elections of directors provides accountability to shareholders
• Annual Board and Board committee evaluations led by the independent Chairman
• All members of our Audit and Finance Committee are financial experts
• Half of our Board and committee leadership positions are held by women
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 13 | ||
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Board of Directors and Committees
Corporate Governance Policies and Practices
Apple’s governance framework is based on a commitment to sound policies and practices.
One share equals | We have a single class of shares with equal voting rights. | |
Annual director | All directors are elected annually for a one-year term. | |
Majority voting | We have a majority voting standard for uncontested elections of directors. | |
Proxy access | Up to 20 shareholders owning at least 3% of shares continuously for three years may nominate up to 20% of our Board. | |
Special meetings | Shareholders owning at least 10% of our outstanding shares have the right to call a special meeting of the shareholders. | |
Separation of Chair | Our CEO is focused on managing Apple and our independent Chair drives accountability at the Board level. | |
Financial expertise | All members of our Audit Committee qualify as audit committee financial experts. | |
Prohibitions on hedging, pledging, and other transactions | We prohibit short sales, transactions in derivatives, and hedging of Apple securities by directors, executive officers, and employees; and prohibit pledging of Apple securities by directors and executive officers. | |
Stock ownership | We have robust stock ownership guidelines for our directors and executive officers. | |
Succession planning | Our Board regularly reviews Board and executive succession planning. | |
Continuing education | Our Board regularly receives training and updates on ethics, compliance, and governance. | |
Board and committee | Our Board and committees conduct annual performance self-evaluations led by our independent Chair, including one-on-one interviews. |
14 | Proxy Statement |
The Board takes an active role in overseeing corporate and product strategy and seeks to ensure that the long-term interests of Apple and its shareholders are being served.
Board Oversight of Apple’s Values and Our People
Throughout the year, the Board and its committees review and discuss with management progress relating to Apple’s values: accessibility, education, environment, inclusion and diversity, privacy, and supplier responsibility. The Board and its committees also review and discuss with management matters related to our people, including Apple’s commitments and progress towards inclusive and diverse representation among our employees, employee engagement, compensation and benefits, business conduct and compliance, and executive succession planning.
In 2020, the Board adopted Apple’s human rights policy—Our Commitment to Human Rights—on behalf of Apple. The policy governs how we treat everyone, including our customers, employees, business partners, and people at every level of our supply chain. Apple identifies salient human rights risks through internal risk assessments and external industry-level third-party audits. Additionally, the policy stipulates that Apple maintains active communication channels with rightsholders and other stakeholders. The Board is responsible for overseeing and periodically reviewing our Human Rights Policy. Apple’s General Counsel is responsible for its implementation, and reports to the Board and its committees on our progress and significant issues identified during the diligence process.
At the onset of the COVID-19 global pandemic, Apple management activated company-wide structures to assess, respond to, and mitigate adverse impacts, including enhanced health and safety measures for our people and the people in our supply chain. During 2021, the Board and its committees continued to review and discuss with management the assessment and mitigation of the impact of COVID-19 on Apple’s employees, supply chain, and business.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 15 |
Board Oversight of Risk Management
The Board believes that evaluating the executive team’s management of the risks confronting Apple is one of its most important areas of oversight. In carrying out this responsibility, the Board is assisted by each of its committees that considers risks within its areas of responsibility and apprises the full Board of significant matters and management’s response.
Board of Directors
Directly oversees corporate and product strategy, executive succession planning, and other matters reserved to the full Board
Reviews and discusses with management significant risks affecting Apple including matters escalated by its committees from within their respective areas of direct oversight
Audit Committee Primary responsibility for assisting the Board with risk oversight | Compensation Oversight of the design and administration of compensation programs and policies | Nominating Oversight of Board structure, governance, and independence |
Management Led by our CEO and executive team, implements and supervises day-to-day risk management processes and reports to the Board and its committees on significant matters |
Enterprise Risk Management Program Designed to identify, assess, monitor, manage, and mitigate Apple’s significant business risks, including financial, operational, compliance, and reputational risks. In 2021, key areas of focus included health and safety, environment, people, privacy and data security, supply chain and operations, and legal and regulatory risks, including antitrust matters. The Risk Oversight Committee, comprised of our Chief Financial Officer, General Counsel, Head of Business Assurance, and other senior business leaders, assists the Audit Committee with its general responsibility for overseeing enterprise risk management. | Internal Audit Designed to identify and help mitigate risk, and improve the company’s overall internal controls. Internal Audit is directly overseen by the Audit Committee and operates pursuant to a charter, which is reviewed and approved annually by the Audit Committee. |
16 | Proxy Statement |
Selected Areas of Board Oversight
Environment. The Board reviews and discusses updates on environmental matters with Apple’s Vice President of Environment, Social, and Policy Initiatives, who is responsible for the development, review, and execution of plans designed to minimize Apple’s impact on the environment. These reports include Apple’s progress towards environmental and climate goals and the environmental impact of our products and operations.
Legal and Regulatory. Together with the Audit Committee, Apple’s Board takes an active role in overseeing legal and regulatory risks related to Apple’s business. The Board receives regular updates from Apple’s General Counsel and Apple’s Chief Compliance Officer on legal and regulatory developments affecting the company, including updates on legislative developments, government investigations, litigation, and other legal proceedings.
Supply Chain. The Board reviews and discusses with management reports regarding Apple’s supply chain and operations. These reports include updates from Apple’s Senior Vice President, Operations, on supply constraints, supply chain diversification, and our program to oversee Apple’s Supplier Code of Conduct and Supplier Responsibility Standards. Apple reports publicly on its efforts and progress in the critical work of protecting people and the planet across its supply chain through an annual People and Environment in Our Supply Chain report.
Selected Areas of Nominating Committee Oversight
Board Succession Planning. Apple’s Nominating Committee is responsible for assessing the Board’s composition to ensure Apple has the mix of skills, experiences, and diversity necessary to promote Board effectiveness. The Nominating Committee oversees board succession planning, recruitment of potential candidates, and the Board’s self-evaluation process.
Selected Areas of Compensation Committee Oversight
Executive Compensation. Apple’s Compensation Committee ovesees risks related to Apple’s compensation programs. Each year, the Compensation Committee evaluates whether the design and operation of Apple’s compensation programs or policies encourage our executive officers or our employees to take unnecessary or excessive risks. In establishing and reviewing Apple’s compensation programs for risk, the Compensation Committee considers program features that mitigate against potential risks for our executive officers, such as fixed base salaries; goals that are tied to specific company financial measures and payout caps for the annual cash incentive program; clawbacks for our cash and equity incentives; the quantity and mix of long-term performance-based and time-based equity incentives; and stock ownership requirements. The Compensation Committee also generally considers the program features that mitigate potential risks for our non-executive officer employees. In its annual review, the Compensation Committee concluded that Apple’s executive compensation programs and policies continue to provide an effective and appropriate mix of incentives to help ensure performance is focused on long-term shareholder value creation, and do not encourage short-term risk taking at the expense of long-term results or create risks that are reasonably likely to have a material adverse effect on Apple.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 17 |
Selected Areas of Audit Committee Oversight
Antitrust Compliance. The Audit Committee oversees Apple’s antitrust compliance program. Apple’s Antitrust Compliance Officer is responsible for the development, review, and execution of Apple’s Antitrust Compliance Program and, together with Apple’s General Counsel and Apple’s Chief Compliance Officer, regularly reports to the Audit Committee. These reports include the alignment of the program with Apple’s potential antitrust risks, and the effectiveness of the program’s design in detecting and preventing antitrust issues and promoting compliance with laws and Apple’s policies.
Business Conduct and Global Compliance. The Audit Committee regularly reviews and discusses with management Apple’s business conduct and compliance risks. Apple’s Chief Compliance Officer is responsible for the development, review, and execution of Apple’s Business Conduct and Global Compliance program and regularly reports to the Audit Committee. These reports include the program’s support and validation of Apple’s principles of conducting business ethically, honestly, and in compliance with applicable laws; the effectiveness of the program’s design in detecting and preventing business conduct violations, and promoting ethical business conduct and compliance with applicable laws and Apple policies; as well as results of program evaluations.
Privacy and Data Security. The Audit Committee oversees Apple’s management of privacy and data security risks. The Audit Committee reviews reports on privacy and data security matters from Apple’s General Counsel, and from the heads of Information Security, Business Conduct and Compliance, Business Assurance, and Internal Audit. These reports include updates on Apple’s privacy program, cybersecurity risks, risk management, and relevant legislative, regulatory, and technical developments. Apple also has a management Privacy Steering Committee chaired by Apple’s General Counsel, with members including Apple’s Senior Vice President of Machine Learning and AI Strategy, Senior Vice President of Software, and a cross functional group of senior representatives from Services, Software Engineering, Product Marketing, Corporate Communications, Information Services & Technology, Information Security, Privacy Legal, and the Head of Business Assurance. The Privacy Steering Committee sets privacy standards for teams across Apple and acts as an escalation point for addressing privacy compliance issues for decision or further escalation.
Tax. The Audit Committee reviews reports on tax matters from Apple’s Chief Financial Officer, General Counsel, the heads of global Tax, Business Assurance, and Internal Audit, and from Apple’s independent auditor. These reports include updates on significant domestic and international tax-related developments, worldwide tax audits, international tax structure, international tax policy, and other tax-related legislative matters.
18 | Proxy Statement |
Reporting
Apple publicly discloses information about our business across a number of topics. This includes our reports on Environmental Progress, People and Environment in Our Supply Chain, and Privacy Transparency, which detail our commitments, programs, and progress on these matters.
In 2021, in response to stakeholder feedback, Apple extended its commitment to transparency with enhanced reporting including Apple’s first Environment, Social and Governance Report (“ESG Report”), which seeks to provide a broad view of our environmental, social, and governance efforts across the company.
We’ve also created a comprehensive index that maps our environmental, social, and governance disclosures (“ESG Index”) across metrics outlined in the Global Reporting Initiative (“GRI”), Sustainability Accounting Standards Board (“SASB”) and the Task Force on Climate-Related Financial Disclosures (“TCFD”) voluntary disclosure frameworks. The ESG Report and ESG Index are available at investor.apple.com/esg.
Shareholder Engagement
We proactively engage with shareholders and other stakeholders throughout the year to learn their perspectives on significant issues, including company performance and strategy, corporate governance, executive compensation, and environmental, social, and governance topics. This engagement helps us better understand shareholder priorities and perspectives, gives us an opportunity to elaborate upon our initiatives with relevant experts, and fosters constructive dialogue. We take feedback and insights from our engagement with shareholders and other stakeholders into consideration as we review and evolve our practices and disclosures, and further share them with our Board as appropriate. Since the date of the 2021 annual meeting of shareholders to the date of this Proxy Statement, management engaged shareholders representing more than a majority of shares held by institutional shareholders, based on the number of institutional shares reported as of September 30, 2021, the latest date that information is available prior to the filing of this Proxy Statement.
Communications with the Board
Any matter intended for the Board, or for any individual member of the Board, should be directed to Apple’s Secretary at One Apple Park Way, MS: 927-4GC, Cupertino, CA 95014 USA, with a request to forward the communication to the intended recipient. In general, any shareholder communication delivered to Apple for forwarding to Board members will be forwarded in accordance with the shareholder’s instructions. Apple reserves the right not to forward to Board members any abusive, threatening, or otherwise inappropriate materials.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 19 |
Policy on Related Party Transactions
The Board has adopted a written policy for approval of transactions between Apple and its directors, director nominees, executive officers, greater than 5% beneficial owners of Apple’s common stock or any other class of Apple’s equity securities, and each of their respective immediate family members, where the amount involved in the transaction exceeds or is reasonably expected to exceed $120,000 in a single fiscal year and the related party has or will have a direct or indirect interest in the transaction (other than solely as a result of being a director or less than 10% beneficial owner of another entity). A copy of this policy is available at investor.apple.com/leadership-and-governance. The policy provides that the Audit Committee reviews transactions subject to the policy and determines whether or not to approve or ratify those transactions. Certain types of transactions are deemed pre-approved pursuant to standing pre-approval guidelines established by the Audit Committee. In addition, the Audit Committee has delegated authority to its Chair to pre-approve or ratify transactions under certain circumstances. A summary of new transactions covered by standing pre-approvals or transactions approved or ratified by the Chair of the Audit Committee, if any, is provided to the Audit Committee for its review.
In reviewing transactions subject to the policy, the Audit Committee or the Chair of the Audit Committee, as applicable, considers among other factors it deems appropriate:
The nature and extent of the related person’s interest in the transaction;
The approximate dollar value of the amount involved in the transaction;
The approximate dollar value of the amount of the related person’s interest in the transaction without regard to the amount of any profit or loss;
Whether the transaction was undertaken in the ordinary course of Apple’s business;
The material terms of the transaction, including whether the transaction with the related person is proposed to be, or was entered into, on terms no less favorable to Apple than terms that could have been reached with an unrelated third-party;
The business purpose of, and the potential benefits to Apple of, the transaction;
Whether the transaction would impair the independence of a non-employee director;
Required public disclosure, if any; and
Any other information regarding the transaction or the related person in the context of the proposed transaction that would be material to the Audit Committee’s decision, in its business judgment, in light of the circumstances of the particular transaction.
20 | Proxy Statement |
Transactions with Related Parties
Several of Apple’s Board members and executive officers serve as directors or executive officers of other organizations, including organizations with which Apple has commercial and charitable relationships. Apple does not believe that any director had a direct or indirect material interest in any such relationships during 2021 and through the date of this Proxy Statement.
Governance Documents
Apple’s key governance documents, including our Corporate Governance Guidelines, are available at investor.apple.com/leadership-and-governance.
Business Conduct Policy
Apple seeks to conduct business ethically, honestly, and in compliance with laws. Apple’s code of ethics, titled “Business Conduct: The way we do business,” set outs the principles that guide Apple’s business practices – honesty, respect, confidentiality, and compliance. The code applies to all employees, including Apple’s principal executive officer, principal financial officer, and principal accounting officer. Relevant sections of the code also apply to the Board. Apple expects its suppliers, contractors, consultants, and other business partners to follow the principles set forth in the code when providing goods and services to Apple or acting on its behalf. The code is available at apple.com/compliance/pdfs/Business-Conduct-Policy.pdf. Apple intends to disclose any changes or waivers from this code by posting such information to our website if such disclosure is required by SEC or Nasdaq rules.
Apple’s code is managed by the Business Conduct organization, under the oversight of Apple’s Chief Compliance Officer. Employees are required to complete training on the code upon joining Apple and annually thereafter. With input from relevant stakeholders and executive leadership, we regularly review and update Apple’s code and related policies to ensure they provide clear, actionable guidance to our employees, executive officers, and directors.
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Board Composition and Refreshment
Apple’s Board consists of a diverse group of highly qualified leaders in their respective fields. All of our directors have senior leadership experience at large domestic and multinational companies. In these positions, they have gained significant and diverse management experience, including strategic and financial planning, public company financial reporting, compliance, risk management, and leadership development. They also have in-depth public company experience serving as executive officers, or on boards of directors and board committees, and have a robust understanding of corporate governance practices and trends. In addition, many of our directors have experience as directors or trustees of significant academic, research, nonprofit, and philanthropic institutions, and bring unique perspectives to the Board.
The Board and the Nominating Committee believe the skills, qualities, attributes, and experiences of our directors provide Apple with business acumen and a diverse range of perspectives to effectively address Apple’s evolving needs and represent the best interests of Apple’s shareholders.
The Nominating Committee considers candidates for director who are recommended by its members, by other Board members, by shareholders, and by management, as well as those identified by third-party search firms retained to assist in identifying and evaluating possible candidates. In evaluating potential nominees to the Board, the Nominating Committee considers, among other things: independence; character; ability to exercise sound judgment; diversity; age; demonstrated leadership; and relevant skills and experience, including financial literacy, antitrust compliance, and other experience in the context of the needs of the Board. The Nominating Committee is committed to actively seeking out highly-qualified women and individuals from underrepresented communities to include in the pool from which Board nominees are chosen. Additionally, the Nominating Committee has instructed its third-party search firms to ensure that diverse candidates are included in slates of potential nominees.
The Nominating Committee, with the assistance of an outside search firm, and input from our independent directors, Chair of the Board, and CEO, identified Alex Gorsky as a potential candidate for election to the Board. The Nominating Committee has evaluated and recommended to the full Board each of the nominees named in this Proxy Statement for election to the Board.
The Nominating Committee evaluates candidates recommended by shareholders using the same criteria as for other candidates recommended by its members, other members of the Board, or other persons. Shareholders who wish to recommend a director candidate should submit the candidate’s name and background information in writing to our Secretary at One Apple Park Way, MS: 927-4GC, Cupertino, CA 95014 USA. In addition, our bylaws provide that a shareholder, or a group of up to 20 shareholders, owning at least 3% of our outstanding shares continuously for at least three years, may nominate director nominees constituting up to 20% of Apple’s Board for inclusion in our proxy statement pursuant to our proxy access provisions. Nominating shareholders and nominees must satisfy the requirements set forth in our bylaws, which can be found at investor.apple.com/leadership-and-governance.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 23 |
The following matrix highlights the mix of key skills, qualities, attributes, and experiences of the nominees that, among other factors, led the Board and the Nominating Committee to recommend these nominees for election to the Board. The matrix is intended to depict notable areas of focus for each director, and not having a mark does not mean that a particular director does not possess that qualification or skill. Nominees have developed competencies in these skills through education, direct experience, and oversight responsibilities. The demographic information presented below is based on voluntary self-identification by each nominee. Additional biographical information on each nominee is set out below starting on page 24.
Director Skills and Demographic Matrix
Levinson | Cook | Bell | Gore | Gorsky | Jung | Lozano | Sugar | Wagner | ||||||||||
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* On December 18, 2019, Air Lease Corporation announced that Dr. Sugar had provided notice to the Air Lease board of directors that he would not stand for re-election at the end of his current term on that board in May 2020.
For a detailed discussion of our corporate governance and directors, please see the section entitled “Corporate Governance” beginning on page 11 and the section entitled “Directors” beginning on page 17.
Apple Inc. | 2020 Proxy Statement | 4
Executive Compensation Program
Our executive compensation program is designed to motivate and reward exceptional performance in a straightforward and effective way, while also recognizing the remarkable size, scope, and success of Apple’s business.
Consistent and Effective Program Design
We follow clear guiding principles in the design of the compensation program for our named executive officers and are committed to sound compensation policies and practices. The overall design of our compensation program and each of its three primary components have remained consistent year-over-year.
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Aligned with Shareholder Interests and Company Performance
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For a detailed discussion of our executive compensation program, please see the section entitled “Compensation Discussion and Analysis” beginning on page 30.
Apple Inc. | 2020 Proxy Statement | 5
Apple Inc. | 2020 Proxy Statement | 6
We believe that we lead in innovation because we lead with our values.
Tim Cook
CEO
Accessibility
apple.com/accessibility
Apple believes accessibility is a fundamental human right and technology should be accessible to everyone.
Our products are powerful and affordable assistive devices, withbuilt-in accessibility features such as VoiceOver, Switch Control, and support for Made for iPhone® hearing aids.
We introduced Voice Control, which allows people, particularly those with physical motor limitations, to fully control their iOS device or Mac® with their voice.
Inclusion & Diversity
apple.com/diversity
We strive to represent the customers and communities we serve—everywhere we operate around the world—because it makes us a better and more innovative company.
We are deeply committed to hiring and promoting inclusively, championing equal pay, increasing diverse representation at all levels, and fostering an inclusive culture that gives every employee the opportunity to do the best work of their lives.
Apple Inc. | 2020 Proxy Statement | 8
Education
apple.com/education
Apple works alongside educators to unleash the creative potential in every student.
Our products and curriculum bring creative expression into the classroom, and our free Apple Teacher professional learning program helps educators integrate technology and creativity into every lesson.
We have reimagined Everyone Can Code and expanded Everyone Can Create resources to better prepare students for a rapidly changing world.
Privacy & Security
apple.com/privacy
Apple believes privacy is a fundamental human right. Every Apple product is designed from the ground up to protect privacy and security.
Great experiences do not have to come at the expense of privacy and security. Instead, they can support them.
To give more control over personal information, we provide a set of dedicated privacy management tools on each user’s Data and Privacy page.
Environment
apple.com/environment
We prioritize the environment in everything we create, design, power, and manufacture.
All of Apple’s global facilities are powered with 100% renewable electricity, and 44 suppliers have committed to 100% renewable electricity for Apple production.
We have continued to transition to recycled and renewable materials in new products, including our most recent iPhone® devices, which use 100% recycled rare earth elements in the Taptic Engine®—a first for a smartphone.
Supplier Responsibility
apple.com/supplier-responsibility
Apple cares deeply about the people who build our products and the planet we all share. We hold ourselves and our suppliers to the highest standards, and we share our work openly.
We are on track to provide health education to over one million people in the supply chain to give people the tools to take charge of their well-being. All of our final assembly facilities for iPhone®, iPad®, Mac®, Apple Watch®, AirPods®, and HomePod™ have achieved UL Zero Waste Certification.
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Apple Inc. | 2020 Proxy Statement | 10
Role of the Board of Directors
Apple’s Board oversees the CEO and other senior management in the competent and ethical operation of Apple on aday-to-day basis and assures that the long-term interests of shareholders are being served. To satisfy the Board’s duties, directors are expected to take a proactive, focused approach to their positions to ensure that Apple is committed to business success through the maintenance of high standards of responsibility and ethics.
The Board believes that Apple’s governance structure fosters principled actions, informed and effective decision-making, and appropriate monitoring of compliance and performance. Apple’s key governance documents, including our Corporate Governance Guidelines, are available atinvestor.apple.com/investor-relations/leadership-and-governance. The Board met five times during 2019, and each member of the Board attended or participated in 75% or more of the aggregate of (i) the total number of meetings of the Board held during 2019, and (ii) the total number of meetings held by each committee of the Board on which such member served during 2019.
The Board has determined that all Board members, other than Mr. Cook, are independent under applicable rules of The Nasdaq Stock Market LLC (“Nasdaq”).
The Board has a standing Audit and Finance Committee (the “Audit Committee”), Compensation Committee, and Nominating and Corporate Governance Committee (the “Nominating Committee”). The Board has determined that the Chairs of each committee and all committee members are independent under applicable Nasdaq and Securities and Exchange Commission (“SEC”) rules for committee memberships. Each committee operates under a written charter adopted by the Board, which is available atinvestor.apple.com/investor-relations/leadership-and-governance.
Audit Committee
• Enterprise Risk Management
• Legal and Regulatory
• Finance, Treasury, and Tax
• Privacy and Data Security
• Community Investments
• Lobbying Expenditures
Compensation Committee
• Executive Compensation
• People and Benefits
• Equity Compensation Plans
Nominating Committee
• Board Succession Planning
• Environmental, Social, and
Governance Reporting
• Shareholder Engagement
For more detailed information on Apple’s corporate governance and risk oversight framework, see the section entitled “Corporate Governance” beginning on page 9.
10 | Proxy Statement |
Role of the Board of Directors
Apple’s Board oversees the CEO and other senior management in the competent and ethical operation of Apple on a day-to-day basis and assures that the long-term interests of shareholders are being served. To satisfy the Board’s duties, directors are expected to take a proactive, focused approach to their positions to ensure that Apple is committed to business success through the maintenance of high standards of responsibility and ethics.
Board Meetings and Attendance
The Board met five times during 2021 with each member of the Board serving at the time attending all of the meetings.
Apple expects all of its directors to attend the Annual Meeting. All directors serving at the time attended the 2021 annual meeting of shareholders.
Board Independence and Qualifications
The Board has determined that all Board members, other than Mr. Cook, are independent under applicable rules of The Nasdaq Stock Market LLC (“Nasdaq”).
Apple’s Board has a standing Audit and Finance Committee (the “Audit Committee”), Compensation Committee, and Nominating and Corporate Governance Committee (the “Nominating Committee”). The Board has determined that all committee members are independent under applicable Nasdaq and Securities and Exchange Commission (“SEC”) rules for committee memberships, and that each member of the Audit Committee also meets the additional independence criteria set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
The Board has also determined that each Audit Committee member qualifies as an “audit committee financial expert” as that term is defined under SEC rules.
Board and Committee Structure
Apple regularly reviews the Board’s leadership structure and the responsibilities and composition of its standing committees. The structure and composition of Apple’s Board and its committees are intended to leverage the diverse perspectives of the Board members and promote effective oversight.
The Board believes that its current leadership structure, in which the roles of Chair and CEO are separated, best serves the Board’s ability to carry out its roles and responsibilities on behalf of Apple’s shareholders, including its oversight of management, and Apple’s overall corporate governance. The Board also believes that the current structure allows our CEO to focus on managing Apple, while leveraging our independent Chair’s experience to drive accountability at the Board level.
The current membership and function of each standing committee is described below. Each committee operates under a written charter adopted by the Board, which is available at investor.apple.com/leadership-and-governance. Each committee reviews and assesses its charter annually.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 11 |
Apple Inc. | 2020
12 | Proxy Statement |
Annual Board and Committee Self-Evaluations
Each committee conducts its own annual self-evaluation and reports the results to the Board. Each committee’s evaluation includes an assessment of the committee’s compliance with Apple’s Corporate Governance Guidelines and the committee’s charter, as well as ways in which committee processes and effectiveness may be enhanced.
The Board believes its current leadership structure best serves the objectives of the Board’s oversight of management, the Board’s ability to carry out its roles and responsibilities on behalf of Apple’s shareholders, and Apple’s overall corporate governance. The Board also believes that the separation of the Chairman and CEO roles allows our CEO to focus his time and energy on operating and managing Apple, while leveraging our Chairman’s experience and perspectives. The Board periodically reviews its leadership structure to determine whether it continues to best serve Apple and its shareholders.
Board Oversight of Risk Management
The Board believes that evaluating the executive team’s management of the various risks confronting Apple is one of its most important areas of oversight. In carrying out this critical responsibility, the Board has designated the Audit Committee with primary responsibility for overseeing enterprise risk management. In accordance with this responsibility, the Audit Committee monitors Apple’s significant business risks, including financial; operational; privacy; data security; business continuity; tax; legal and regulatory compliance; and reputational risks. The Audit Committee reviews the steps management has taken to monitor and mitigate these risks. With respect to privacy and data security, the Audit Committee reviews reports from Apple’s General Counsel and the heads of information security, business conduct and compliance, business assurance, and internal audit. These reports include updates on risk management, Apple’s privacy program, and relevant legislative, regulatory, and technical developments.
The Audit Committee is assisted in its risk oversight duties by a Risk Oversight Committee consisting of key members of management, including, among others, Apple’s Chief Financial Officer, General Counsel, and head of business assurance. The Risk Oversight Committee reports regularly to the Audit Committee. Senior members of management responsible for risk management across a wide range of areas and functions also report regularly to the Audit Committee.
While the Audit Committee has primary responsibility for overseeing enterprise risk management and reports regularly to the Board, the other Board committees also consider risks within their areas of responsibility and apprise the Board of significant risks and management’s response to those risks. For example, the Nominating Committee reviews legal and regulatory compliance risks as they relate to Apple’s corporate governance structure and processes, and the Compensation Committee reviews risks related to compensation matters. While the Board and its committees oversee risk management strategy, management is responsible for implementing and supervisingday-to-day risk management processes and reporting to the Board and its committees.
In establishing and reviewing Apple’s executive compensation program, the Compensation Committee considers whether the program encourages unnecessary or excessive risk-taking and has concluded that it does not. Base salaries are fixed in amount and thus do not encourage risk-taking. Annual cash incentives are capped and payouts are formulaic and tied to specific company financial performance measures. A substantial portion of each
Apple Inc. | 2020 Proxy Statement | 14
executive officer’s compensation is in the form of time-based and performance-based equity awards that vest over several years and help align their interests with those of Apple’s shareholders in creating long-term shareholder value. The Compensation Committee believes that these awards do not encourage unnecessary or excessive risk-taking because the ultimate value of the awards is tied to Apple’s share price performance over several years and because awards are subject to regular vesting schedules.
The Compensation Committee has also reviewed Apple’s compensation programs for employees generally and has concluded that these programs do not create risks that are reasonably likely to have a material adverse effect on Apple. The Compensation Committee believes that Apple’s cash bonus programs and long-term equity awards provide an effective and appropriate mix of incentives to help ensure performance is focused on long-term shareholder value creation and do not encourage short-term risk taking at the expense of long-term results.
Audit Committee Financial Experts
The Board has determined that each member of the Audit Committee qualifies as an “audit committee financial expert” as defined under applicable SEC rules and also meets the additional criteria for independence of audit committee members set forth in Rule10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Apple has a code of ethics, titled “Business Conduct: The way we do business worldwide,” that applies to all employees, including Apple’s principal executive officer, principal financial officer, and principal accounting officer; to the Board; and to independent contractors, consultants, and others who do business with Apple. The code is available atinvestor.apple.com/leadership-and-governance. Apple intends to disclose any changes in this code or waivers from this code that apply to Apple’s principal executive officer, principal financial officer, or principal accounting officer by posting such information to our website or by filing with the SEC a Current Report on Form8-K, in each case if such disclosure is required by SEC or Nasdaq rules.
Review, Approval, or Ratification of Transactions with Related Persons
The Board has adopted a written policy for approval of transactions between Apple and its directors, director nominees, executive officers, greater than 5% beneficial owners of Apple’s common stock or any other class of Apple’s equity securities, and each of their respective immediate family members, where the amount involved in the transaction exceeds or is expected to exceed $120,000 in a single calendar year and the related party has or will have a direct or indirect interest in the transaction (other than solely as a result of being a director or less than 10% beneficial owner of another entity). A copy of this policy is available atinvestor.apple.com/leadership-and-governance. The policy provides that the Audit Committee reviews transactions subject to the policy and determines whether or not to approve or ratify those transactions. In addition, the Audit Committee has delegated authority to the Chair of the Audit Committee topre-approve or ratify transactions under certain circumstances. In reviewing transactions subject to the policy, the Audit Committee or the Chair of the Audit Committee, as applicable, considers among other factors it deems appropriate:
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Self-Evaluations
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Apple Inc. | 2020 Proxy Statement | 15
The Board conducts an annual self-evaluation to assess whether the Board, its committees, and each member of the Board are working effectively together, and to provide an opportunity to reflect upon, and improve, processes and effectiveness.
The Nominating Committee designs and establishes the overall evaluation framework, and Dr. Levinson, the independent Chair of the Board, leads the evaluation interviews and feedback. Dr. Levinson conducts one-on-one discussions with each director to obtain their assessment of the effectiveness and performance of the Board and its committees. Additional discussion topics include Board and committee composition and refreshment; timing, agenda, and content of Board and committee meetings; Board dynamics and function; peer reviews of other members; and executive succession planning. Board members are also invited to discuss the performance of Dr. Levinson directly with the Chair of the Nominating Committee. A summary of the results is presented to the Board on an anonymous basis, identifying any themes or issues that have emerged.
Each committee conducts its own annual self-evaluation and reports the results to the Board. Each committee’s evaluation also includes an assessment of the committee’s compliance with Apple’s Corporate Governance Guidelines and the committee’s charter.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 13 |
Corporate Governance Policies and Practices
Apple’s governance framework is based on a commitment to sound policies and practices.
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One share equals
one vote
We have a single class of shares with equal voting rights. | |||
Annual director |
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A summary of new transactions covered by standingpre-approvals established by the Audit Committee, or transactions approved or ratified by the Chair of the Audit Committee, if any, is provided to the Audit Committee for its review.
Transactions with Related Persons
Several of Apple’s Board members and executive officers serve as directors or executive officers of other organizations, including organizations with which Apple has commercial and charitable relationships. Apple does not believe that any director had a direct or indirect material interest in any such relationships during 2019.
Attendance of Directors at Annual Meetings of Shareholders
Apple expects all of its directors to attend the Annual Meeting. All directors serving at that time attended the 2019 annual meetingare elected annually for a one-year term.
Majority voting
We have a majority voting standard for uncontested elections of shareholders.directors.
Any matter intended for the Board, or for any individual member of the Board, should be directed to Apple’s Secretary at One Apple Park Way, MS:169-5GC, Cupertino, CA 95014 USA, with a request to forward the communication to the intended recipient. In general, any shareholder communication delivered to Apple for forwarding to Board members will be forwarded in accordance with the shareholder’s instructions. However, Apple reserves the right not to forward to Board members any abusive, threatening, or otherwise inappropriate materials. Information regarding the submission of comments or complaints relating to Apple’s accounting, internal accounting controls, or auditing matters is available under our Policy on Reporting Questionable Accounting or Auditing Matters atinvestor.apple.com/leadership-and-governance.
Apple Inc. | 2020 Proxy Statement | 16access
Apple’s Board consists of a diverse group of highly qualified leaders in their respective fields. Most of our directors have senior leadership experience at major domestic and multinational companies. In these positions, they have gained significant and diverse management experience, including strategic and financial planning, public company financial reporting, compliance, risk management, and leadership development. They also have experience serving as executive officers, or on boards of directors and board committees of other public companies, and have an understanding of corporate governance practices and trends. In addition, many of our directors have experience as directors or trustees of significant academic, research, nonprofit, and philanthropic institutions, and bring unique perspectives to the Board.
The Board and the Nominating Committee believe the skills, qualities, attributes, and experience of our directors provide Apple with business acumen and a diverse range of perspectives to engage each other and management to effectively address Apple’s evolving needs and represent the best interests of Apple’s shareholders.
The Nominating Committee considers candidates for director who are recommended by its members, by other Board members, by shareholders, and by management, as well as those identified by third-party search firms retained to assist in identifying and evaluating possible candidates. In evaluating potential nominees to the Board, the Nominating Committee considers, among other things: independence; character; ability to exercise sound judgment; diversity; age; demonstrated leadership; and relevant skills and experience, including financial literacy, antitrust compliance, and other experience in the context of the needs of the Board. The Nominating Committee is committed to actively seeking out highly qualified women and individuals from minority groups to include in the pool from which Board nominees are chosen.
The Nominating Committee evaluates candidates recommended by shareholders using the same criteria as for other candidates recommended by its members, other members of the Board, or other persons. In addition, our bylaws provide that a shareholder, or a group of upUp to 20 shareholders owning at least 3% of our outstanding shares continuously for at least three years may nominate director nominees constituting up to 20% of Apple’s Board that would be included in our proxy statement pursuantBoard.
Special meetings
Shareholders owning at least 10% of our outstanding shares have the right to our proxy access provisions. Nominating shareholders and nominees must satisfy the requirements set forth in our bylaws, which can be found atinvestor.apple.com/leadership-and-governance.
The following biographies describe the skills, qualities, attributes, and experiencecall a special meeting of the nominees thatshareholders.
Separation of Chair
and CEO roles
Our CEO is focused on managing Apple and our independent Chair drives accountability at the Board level.
Financial expertise
All members of our Audit Committee qualify as audit committee financial experts.
We prohibit short sales, transactions in derivatives, and hedging of Apple securities by directors, executive officers, and employees; and prohibit pledging of Apple securities by directors and executive officers.
Stock ownership
guidelines
We have robust stock ownership guidelines for our directors and executive officers.
Succession planning
Our Board regularly reviews Board and executive succession planning.
Continuing education
and training
Our Board regularly receives training and updates on ethics, compliance, and governance.
Board and committee
self-evaluations
Our Board and committees conduct annual performance self-evaluations led by our independent Chair, including one-on-one interviews.
14 | Proxy Statement |
The Board takes an active role in overseeing corporate and product strategy and seeks to ensure that the long-term interests of Apple and its shareholders are being served.
Board Oversight of Apple’s Values and Our People
Throughout the year, the Board and its committees review and discuss with management progress relating to Apple’s values: accessibility, education, environment, inclusion and diversity, privacy, and supplier responsibility. The Board and its committees also review and discuss with management matters related to our people, including Apple’s commitments and progress towards inclusive and diverse representation among our employees, employee engagement, compensation and benefits, business conduct and compliance, and executive succession planning.
In 2020, the Board adopted Apple’s human rights policy—Our Commitment to Human Rights—on behalf of Apple. The policy governs how we treat everyone, including our customers, employees, business partners, and people at every level of our supply chain. Apple identifies salient human rights risks through internal risk assessments and external industry-level third-party audits. Additionally, the policy stipulates that Apple maintains active communication channels with rightsholders and other stakeholders. The Board is responsible for overseeing and periodically reviewing our Human Rights Policy. Apple’s General Counsel is responsible for its implementation, and reports to the Board and its committees on our progress and significant issues identified during the diligence process.
At the onset of the COVID-19 global pandemic, Apple management activated company-wide structures to assess, respond to, and mitigate adverse impacts, including enhanced health and safety measures for our people and the people in our supply chain. During 2021, the Board and its committees continued to review and discuss with management the assessment and mitigation of the impact of COVID-19 on Apple’s employees, supply chain, and business.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 15 |
Board Oversight of Risk Management
The Board believes that evaluating the executive team’s management of the risks confronting Apple is one of its most important areas of oversight. In carrying out this responsibility, the Board is assisted by each of its committees that considers risks within its areas of responsibility and apprises the full Board of significant matters and management’s response.
Board of Directors
Directly oversees corporate and product strategy, executive succession planning, and other matters reserved to the full Board
Reviews and discusses with management significant risks affecting Apple including matters escalated by its committees from within their respective areas of direct oversight
Audit Committee Primary responsibility for assisting the Board with risk oversight | Compensation Oversight of the design and administration of compensation programs and policies | Nominating Oversight of Board structure, governance, and independence |
Management Led by our CEO and executive team, implements and supervises day-to-day risk management processes and reports to the Board and its committees on significant matters |
Enterprise Risk Management Program Designed to identify, assess, monitor, manage, and mitigate Apple’s significant business risks, including financial, operational, compliance, and reputational risks. In 2021, key areas of focus included health and safety, environment, people, privacy and data security, supply chain and operations, and legal and regulatory risks, including antitrust matters. The Risk Oversight Committee, comprised of our Chief Financial Officer, General Counsel, Head of Business Assurance, and other senior business leaders, assists the | Internal Audit Designed to |
16 | Proxy Statement |
Selected Areas of Board Oversight
Environment. The Board reviews and discusses updates on environmental matters with Apple’s Vice President of Environment, Social, and Policy Initiatives, who is responsible for the development, review, and execution of plans designed to minimize Apple’s impact on the environment. These reports include Apple’s progress towards environmental and climate goals and the environmental impact of our products and operations.
Legal and Regulatory. Together with the Audit Committee, Apple’s Board takes an active role in overseeing legal and regulatory risks related to Apple’s business. The Board receives regular updates from Apple’s General Counsel and Apple’s Chief Compliance Officer on legal and regulatory developments affecting the company, including updates on legislative developments, government investigations, litigation, and other legal proceedings.
Supply Chain. The Board reviews and discusses with management reports regarding Apple’s supply chain and operations. These reports include updates from Apple’s Senior Vice President, Operations, on supply constraints, supply chain diversification, and our program to oversee Apple’s Supplier Code of Conduct and Supplier Responsibility Standards. Apple reports publicly on its efforts and progress in the critical work of protecting people and the planet across its supply chain through an annual People and Environment in Our Supply Chain report.
Selected Areas of Nominating Committee Oversight
Board Succession Planning. Apple’s Nominating Committee is responsible for assessing the Board’s composition to ensure Apple has the mix of skills, experiences, and diversity necessary to promote Board effectiveness. The Nominating Committee oversees board succession planning, recruitment of potential candidates, and the Board’s self-evaluation process.
Selected Areas of Compensation Committee Oversight
Executive Compensation. Apple’s Compensation Committee ovesees risks related to Apple’s compensation programs. Each year, the Compensation Committee evaluates whether the design and operation of Apple’s compensation programs or policies encourage our executive officers or our employees to take unnecessary or excessive risks. In establishing and reviewing Apple’s compensation programs for risk, the Compensation Committee considers program features that mitigate against potential risks for our executive officers, such as fixed base salaries; goals that are tied to specific company financial measures and payout caps for the annual cash incentive program; clawbacks for our cash and equity incentives; the quantity and mix of long-term performance-based and time-based equity incentives; and stock ownership requirements. The Compensation Committee also generally considers the program features that mitigate potential risks for our non-executive officer employees. In its annual review, the Compensation Committee concluded that Apple’s executive compensation programs and policies continue to provide an effective and appropriate mix of incentives to help ensure performance is focused on long-term shareholder value creation, and do not encourage short-term risk taking at the expense of long-term results or create risks that are reasonably likely to have a material adverse effect on Apple.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 17 |
Selected Areas of Audit Committee Oversight
Antitrust Compliance. The Audit Committee oversees Apple’s antitrust compliance program. Apple’s Antitrust Compliance Officer is responsible for the development, review, and execution of Apple’s Antitrust Compliance Program and, together with Apple’s General Counsel and Apple’s Chief Compliance Officer, regularly reports to the Audit Committee. These reports include the alignment of the program with Apple’s potential antitrust risks, and the effectiveness of the program’s design in detecting and preventing antitrust issues and promoting compliance with laws and Apple’s policies.
Business Conduct and Global Compliance. The Audit Committee regularly reviews and discusses with management Apple’s business conduct and compliance risks. Apple’s Chief Compliance Officer is responsible for the development, review, and execution of Apple’s Business Conduct and Global Compliance program and regularly reports to the Audit Committee. These reports include the program’s support and validation of Apple’s principles of conducting business ethically, honestly, and in compliance with applicable laws; the effectiveness of the program’s design in detecting and preventing business conduct violations, and promoting ethical business conduct and compliance with applicable laws and Apple policies; as well as results of program evaluations.
Privacy and Data Security. The Audit Committee oversees Apple’s management of privacy and data security risks. The Audit Committee reviews reports on privacy and data security matters from Apple’s General Counsel, and from the heads of Information Security, Business Conduct and Compliance, Business Assurance, and Internal Audit. These reports include updates on Apple’s privacy program, cybersecurity risks, risk management, and relevant legislative, regulatory, and technical developments. Apple also has a management Privacy Steering Committee chaired by Apple’s General Counsel, with members including Apple’s Senior Vice President of Machine Learning and AI Strategy, Senior Vice President of Software, and a cross functional group of senior representatives from Services, Software Engineering, Product Marketing, Corporate Communications, Information Services & Technology, Information Security, Privacy Legal, and the Head of Business Assurance. The Privacy Steering Committee sets privacy standards for teams across Apple and acts as an escalation point for addressing privacy compliance issues for decision or further escalation.
Tax. The Audit Committee reviews reports on tax matters from Apple’s Chief Financial Officer, General Counsel, the heads of global Tax, Business Assurance, and Internal Audit, and from Apple’s independent auditor. These reports include updates on significant domestic and international tax-related developments, worldwide tax audits, international tax structure, international tax policy, and other tax-related legislative matters.
18 | Proxy Statement |
Reporting
Apple publicly discloses information about our business across a number of topics. This includes our reports on Environmental Progress, People and Environment in Our Supply Chain, and Privacy Transparency, which detail our commitments, programs, and progress on these matters.
In 2021, in response to stakeholder feedback, Apple extended its commitment to transparency with enhanced reporting including Apple’s first Environment, Social and Governance Report (“ESG Report”), which seeks to provide a broad view of our environmental, social, and governance efforts across the company.
We’ve also created a comprehensive index that maps our environmental, social, and governance disclosures (“ESG Index”) across metrics outlined in the Global Reporting Initiative (“GRI”), Sustainability Accounting Standards Board (“SASB”) and the Task Force on Climate-Related Financial Disclosures (“TCFD”) voluntary disclosure frameworks. The ESG Report and ESG Index are available at investor.apple.com/esg.
Shareholder Engagement
We proactively engage with shareholders and other stakeholders throughout the year to learn their perspectives on significant issues, including company performance and strategy, corporate governance, executive compensation, and environmental, social, and governance topics. This engagement helps us better understand shareholder priorities and perspectives, gives us an opportunity to elaborate upon our initiatives with relevant experts, and fosters constructive dialogue. We take feedback and insights from our engagement with shareholders and other stakeholders into consideration as we review and evolve our practices and disclosures, and further share them with our Board as appropriate. Since the date of the 2021 annual meeting of shareholders to the date of this Proxy Statement, management engaged shareholders representing more than a majority of shares held by institutional shareholders, based on the number of institutional shares reported as of September 30, 2021, the latest date that information is available prior to the filing of this Proxy Statement.
Communications with the Board
Any matter intended for the Board, or for any individual member of the Board, should be directed to Apple’s Secretary at One Apple Park Way, MS: 927-4GC, Cupertino, CA 95014 USA, with a request to forward the communication to the intended recipient. In general, any shareholder communication delivered to Apple for forwarding to Board members will be forwarded in accordance with the shareholder’s instructions. Apple reserves the right not to forward to Board members any abusive, threatening, or otherwise inappropriate materials.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 19 |
Policy on Related Party Transactions
The Board has adopted a written policy for approval of transactions between Apple and its directors, director nominees, executive officers, greater than 5% beneficial owners of Apple’s common stock or any other class of Apple’s equity securities, and each of their respective immediate family members, where the amount involved in the transaction exceeds or is reasonably expected to exceed $120,000 in a single fiscal year and the related party has or will have a direct or indirect interest in the transaction (other than solely as a result of being a director or less than 10% beneficial owner of another entity). A copy of this policy is available at investor.apple.com/leadership-and-governance. The policy provides that the Audit Committee reviews transactions subject to the policy and determines whether or not to approve or ratify those transactions. Certain types of transactions are deemed pre-approved pursuant to standing pre-approval guidelines established by the Audit Committee. In addition, the Audit Committee has delegated authority to its Chair to pre-approve or ratify transactions under certain circumstances. A summary of new transactions covered by standing pre-approvals or transactions approved or ratified by the Chair of the Audit Committee, if any, is provided to the Audit Committee for its review.
In reviewing transactions subject to the policy, the Audit Committee or the Chair of the Audit Committee, as applicable, considers among other factors it deems appropriate:
The nature and extent of the related person’s interest in the transaction;
The approximate dollar value of the amount involved in the transaction;
The approximate dollar value of the amount of the related person’s interest in the transaction without regard to the amount of any profit or loss;
Whether the transaction was undertaken in the ordinary course of Apple’s business;
The material terms of the transaction, including whether the transaction with the related person is proposed to be, or was entered into, on terms no less favorable to Apple than terms that could have been reached with an unrelated third-party;
The business purpose of, and the potential benefits to Apple of, the transaction;
Whether the transaction would impair the independence of a non-employee director;
Required public disclosure, if any; and
Any other information regarding the transaction or the related person in the context of the proposed transaction that would be material to the Audit Committee’s decision, in its business judgment, in light of the circumstances of the particular transaction.
20 | Proxy Statement |
Transactions with Related Parties
Several of Apple’s Board members and executive officers serve as directors or executive officers of other organizations, including organizations with which Apple has commercial and charitable relationships. Apple does not believe that any director had a direct or indirect material interest in any such relationships during 2021 and through the date of this Proxy Statement.
Governance Documents
Apple’s key governance documents, including our Corporate Governance Guidelines, are available at investor.apple.com/leadership-and-governance.
Business Conduct Policy
Apple seeks to conduct business ethically, honestly, and in compliance with laws. Apple’s code of ethics, titled “Business Conduct: The way we do business,” set outs the principles that guide Apple’s business practices – honesty, respect, confidentiality, and compliance. The code applies to all employees, including Apple’s principal executive officer, principal financial officer, and principal accounting officer. Relevant sections of the code also apply to the Board. Apple expects its suppliers, contractors, consultants, and other business partners to follow the principles set forth in the code when providing goods and services to Apple or acting on its behalf. The code is available at apple.com/compliance/pdfs/Business-Conduct-Policy.pdf. Apple intends to disclose any changes or waivers from this code by posting such information to our website if such disclosure is required by SEC or Nasdaq rules.
Apple’s code is managed by the Business Conduct organization, under the oversight of Apple’s Chief Compliance Officer. Employees are required to complete training on the code upon joining Apple and annually thereafter. With input from relevant stakeholders and executive leadership, we regularly review and update Apple’s code and related policies to ensure they provide clear, actionable guidance to our employees, executive officers, and directors.
22 | Proxy Statement |
Board Composition and Refreshment
Apple’s Board consists of a diverse group of highly qualified leaders in their respective fields. All of our directors have senior leadership experience at large domestic and multinational companies. In these positions, they have gained significant and diverse management experience, including strategic and financial planning, public company financial reporting, compliance, risk management, and leadership development. They also have in-depth public company experience serving as executive officers, or on boards of directors and board committees, and have a robust understanding of corporate governance practices and trends. In addition, many of our directors have experience as directors or trustees of significant academic, research, nonprofit, and philanthropic institutions, and bring unique perspectives to the Board.
The Board and the Nominating Committee believe the skills, qualities, attributes, and experiences of our directors provide Apple with business acumen and a diverse range of perspectives to effectively address Apple’s evolving needs and represent the best interests of Apple’s shareholders.
The Nominating Committee considers candidates for director who are recommended by its members, by other Board members, by shareholders, and by management, as well as those identified by third-party search firms retained to assist in identifying and evaluating possible candidates. In evaluating potential nominees to the Board, the Nominating Committee considers, among other things: independence; character; ability to exercise sound judgment; diversity; age; demonstrated leadership; and relevant skills and experience, including financial literacy, antitrust compliance, and other experience in the context of the needs of the Board. The Nominating Committee is committed to actively seeking out highly-qualified women and individuals from underrepresented communities to include in the pool from which Board nominees are chosen. Additionally, the Nominating Committee has instructed its third-party search firms to ensure that diverse candidates are included in slates of potential nominees.
The Nominating Committee, with the assistance of an outside search firm, and input from our independent directors, Chair of the Board, and CEO, identified Alex Gorsky as a potential candidate for election to the Board. The Nominating Committee has evaluated and recommended to the full Board each of the nominees named in this Proxy Statement for election to the Board.
The Nominating Committee evaluates candidates recommended by shareholders using the same criteria as for other candidates recommended by its members, other members of the Board, or other persons. Shareholders who wish to recommend a director candidate should submit the candidate’s name and background information in writing to our Secretary at One Apple Park Way, MS: 927-4GC, Cupertino, CA 95014 USA. In addition, our bylaws provide that a shareholder, or a group of up to 20 shareholders, owning at least 3% of our outstanding shares continuously for at least three years, may nominate director nominees constituting up to 20% of Apple’s Board for inclusion in our proxy statement pursuant to our proxy access provisions. Nominating shareholders and nominees must satisfy the requirements set forth in our bylaws, which can be found at investor.apple.com/leadership-and-governance.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 23 |
The following matrix highlights the mix of key skills, qualities, attributes, and experiences of the nominees that, among other factors, led the Board and the Nominating Committee to recommend these nominees for election to the Board. The matrix is intended to depict notable areas of focus for each director, and not having a mark does not mean that a particular director does not possess that qualification or skill. Nominees have developed competencies in these skills through education, direct experience, and oversight responsibilities. The demographic information presented below is based on voluntary self-identification by each nominee. Additional biographical information on each nominee is set out below starting on page 24.
Director Skills and Demographic Matrix
Levinson | Cook | Bell | Gore | Gorsky | Jung | Lozano | Sugar | Wagner | ||||||||||
Core | ||||||||||||||||||
Leadership | l | l | l | l | l | l | l | l | l | |||||||||
Corporate Governance | l | l | l | l | l | l | l | l | l | |||||||||
Risk Management | l | l | l | l | l | l | l | l | l | |||||||||
Financial | l | l | l | l | l | l | l | l | l | |||||||||
Strategic | ||||||||||||||||||
Global Business and Operations | l | l | l | l | l | l | l | |||||||||||
Brand and Marketing | l | l | l | l | l | l | ||||||||||||
People and Culture | l | l | l | l | l | l | l | l | ||||||||||
Innovation and Technology | l | l | l | l | l | l | l | |||||||||||
Environment and Climate | l | l | ||||||||||||||||
Public Policy and Government | l | l | l | |||||||||||||||
Privacy and Security | l | l | l | l | ||||||||||||||
Identity | ||||||||||||||||||
Gender Expression | Male | Male | Male | Male | Male | Female | Female | Male | Female | |||||||||
LGBTQ+ | No | Yes | No | No | No | No | No | No | No | |||||||||
Race/Ethnicity | White | White | Black | White | White | Asian | Latino Multiracial | White | White |
24 | Proxy Statement |
Art Levinson Chair of the
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Art Levinson, Dr. Levinson previously served as Chief Executive Officer of Genentech, Inc., a medical drug developer, from July 1995 to April 2009, and served as Genentech’s Chairman from September 1999 to September 2014. Among other qualifications, Dr. Levinson brings to the Board executive leadership experience, including his service as a chairman and chief executive officer of a large international public company, along with extensive financial expertise and brand marketing experience. | Selected Directorships • Board of Directors, Broad Institute of Harvard and MIT • Board of Scientific Consultants, Memorial Sloan Kettering Cancer Center
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Advisory Council, Lewis-Sigler Institute for Integrative Genomics
Advisory Council, Princeton University Department of Molecular Biology
Science Advisory Board, Chan Zuckerberg Initiative
Chief Executive Officer Director since 2011 | ||
Tim Cook, Mr. Cook joined Apple in March 1998 and served as Executive Vice President, Worldwide Sales and Operations from February 2002 to October 2005. From October 2000 to February 2002, Mr. Cook served as Senior Vice President, Worldwide Operations, Sales, Service and Support. From March 1998 to October 2000, Mr. Cook served as Senior Vice President, Worldwide Operations. Among other qualifications, Mr. Cook brings to the Board extensive executive leadership experience in the technology industry, including the management of worldwide operations, sales, service, and support. | Other Current Public Company Directorships • NIKE, Inc. Selected Directorships and Memberships • Board of Directors, The National Football Foundation & College Hall of Fame, Inc. • Board of Trustees, Duke University • Leadership Council, Malala Fund |
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 25 |
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James Bell, Among other qualifications, Mr. Bell brings to the Board financial and accounting expertise as a former chief financial officer of a large international public company, experience in strategic planning and leadership of complex organizations, and a global business perspective from his service on other boards. | Other Current Public Company Directorships
• CDW Corporation
Selected Directorships and Memberships • Board of Trustees, Rush University Medical Center Former Public Company Directorships Within the Last Five Years • Dow Inc. • DowDupont Inc. • JPMorgan Chase & Co. |
Director since 2003 | Compensation Committee Nominating Committee | ||
Al Gore,
Mr. Gore was elected to the U.S. House of Representatives four times, to the U.S. Senate two times, and served two terms as Vice President of the United States. Among other qualifications, Mr. Gore brings to the Board executive leadership experience, a valuable and different perspective due to his extensive background in digital communication and technology policy, politics, and environmental rights, along with experience in asset management and venture capital. | Selected Directorships and Memberships
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26 | Proxy Statement |
Alex Gorsky Director since 2021 | Nominating Committee | ||
Alex Gorsky, 61, is the Executive Chairman of Johnson & Johnson, a global healthcare products company, having previously served as Chairman and CEO. Mr. Gorsky was named CEO and joined the Board of Johnson & Johnson in April 2012. He was subsequently named Chairman of the Board in December 2012. Mr. Gorsky joined Johnson & Johnson in 1988, serving in various positions of increasing responsibility. In 2004, Mr. Gorsky left Johnson & Johnson to join Novartis Pharmaceuticals Corporation, where he served as head of its pharmaceutical business in North America, before returning to Johnson & Johnson in 2008. Among other qualifications, Mr. Gorsky brings to the Board executive leadership experience, including his service as a chairman and chief executive officer of a large international public company, along with extensive experience in the fields of health and technology. | Other Current Public Company Directorships • Johnson & Johnson • International Business Machines Corporation Selected Directorships and Memberships • Board of Directors, Travis Manion Foundation • Board of Directors, National Academy Foundation • Board of Advisors, The Wharton School |
Andrea Jung Director since 2008 | Compensation Committee (Chair) Nominating Committee | ||
Andrea Jung, Ms. Jung previously served as Executive Chairman of Avon Products, Inc., a personal care products company, from April 2012 to December 2012, and as Chairman of the Board of Avon from September 2001 to April 2012. Ms. Jung served as Chief Executive Officer of Avon from November 1999 to April 2012, and served as a member of the Board of Avon from January 1998 to December 2012. Among other qualifications, Ms. Jung brings to the Board executive leadership experience, including her service as a chairman and chief executive officer of a large international public company, along with extensive brand marketing and consumer products experience, and a global business perspective from her service on other boards. | Other Current Public Company Directorships • Unilever PLC and Unilever N.V. • Wayfair Inc. Selected Directorships and Memberships • Board of Directors, Rockefeller Capital Management
Former Public Company Directorships Within the Last Five Years • Daimler AG • General Electric Company |
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 27 |
Monica Lozano Director since 2021 | Audit Committee | ||
Monica Lozano, 65, has served as the President and Chief Executive Officer of The College Futures Foundation, a charitable foundation working to increase the rate of college graduation for low-income California students, since December 2017. Ms. Lozano previously served as Chair of the Board of Directors of U.S. Hispanic Media, Inc., the parent company of ImpreMedia, LLC, a Hispanic news and information company, from June 2014 to January 2016. Ms. Lozano previously served as Chair and Chief Executive Officer of ImpreMedia, LLC from 2010 to 2014. Among other qualifications, Ms. Lozano brings to the Board executive leadership experience, including her service as a board chair and chief executive officer, experience in operations, strategic planning and marketing, and a global business perspective from her service on other boards. | Other Current Public Company Directorships • Bank of America Corporation • Target Corporation Selected Directorships • Board of Directors, Weingart Foundation • Member, American Academy of Arts and Sciences |
Ron Sugar Director since 2010 | Audit Committee (Chair) | ||||||||
Ron Sugar, Among other qualifications, Dr. Sugar brings to the Board executive leadership experience as a chairman and chief executive officer of a large international public company, financial expertise as a former chief financial officer, understanding of advanced technology, experience with government relations and public policy, and a global business perspective from his service on other boards. | Other Current Public Company
• Amgen Inc. • Chevron Corporation • Uber Technologies, Inc. Selected Directorships and Memberships • Member, National Academy of Engineering • Board of Trustees, University of Southern California • Board of Directors, Los Angeles Philharmonic Association
Former Public Company Directorships Within the Last Five Years • Air Lease Corporation |
28 | Proxy Statement |
Audit Committee | ||
Sue Wagner, Among other qualifications, Ms. Wagner brings to the Board operational experience, including her service as chief operating officer of a large multinational public company, along with extensive financial expertise and experience in the highly regulated financial services industry, and a global business perspective from her tenure at BlackRock, as well as her service on other boards. | Other Current Public Company Directorships • BlackRock, Inc. • Swiss Re • Samsara Inc. Selected Directorships and Memberships • Board of Directors, Color • Board of Trustees, Wellesley College |
Apple Inc. | 2020
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 29 |
Members of the Board who are not Apple employees(“Non-Employee Directors”) receive compensation for their service. As an Apple employee, Mr. Cook, our CEO, does not receive compensation for his service as a Board member. The Compensation Committee annually reviews the total compensation of our Non-Employee Directors and each element of our Non-Employee Director compensation program. As part of this process, the Compensation Committee evaluates market data provided by its independent compensation consultant, Pay Governance LLC (“Pay Governance”), and makes a recommendation to the Board. The Board determines the form and amount of Non-Employee Director compensation after reviewing the Compensation Committee’s recommendation. The Apple Inc. Non-Employee Director Stock Plan (“Director Stock Plan”) provides for an annual limit of $1.5 million for all compensation paid to a Non-Employee Director.
Cash Retainers. Our Non-Employee Directors receive an annual cash retainer of $100,000. In 2021, the Chairman of the Board, Dr. Levinson, received an additional cash retainer of $200,000; the Chair of the Audit Committee, Dr. Sugar, received an additional cash retainer of $35,000; the Chair of the Compensation Committee, Ms. Jung, received an additional cash retainer of $30,000; and the Chair of the Nominating Committee, Ms. Wagner, received an additional cash retainer of $25,000. All retainers are paid in quarterly installments.
Equity-Based Awards. A substantial portion of each Non-Employee Director’s annual retainer is in the form of equity awards. Under the Director Stock Plan, Non-Employee Directors are granted restricted stock units (“RSUs”) receive compensation for their service. Mr. Cook, our CEO, does not receive any compensation for his service as a member of the Board. The Compensation Committee annually reviews the total compensation of ourNon-Employee Directors and each element of ourNon-Employee Director compensation program. As part of this process, the Compensation Committee evaluates market data provided by its independent compensation consulting firm, Pay Governance LLC, and makes a recommendation to the Board. The Board determines the form and amount ofNon-Employee Director compensation after reviewing the Compensation Committee’s recommendation. The Apple Inc.Non-Employee Director Stock Plan provides for an annual limit of $1.5 million for all compensation paid to aNon-Employee Director. No changes were made to the compensation of ourNon-Employee Directors for 2019.
Cash Retainers.Non-Employee Directors receive an annual cash retainer of $100,000. In 2019, the Chairman of the Board, Dr. Levinson, received an additional cash retainer of $200,000; the Chair of the Audit Committee, Dr. Sugar, received an additional cash retainer of $35,000; the Chair of the Compensation Committee, Ms. Jung, received an additional cash retainer of $30,000; and the former Chair of the Nominating Committee, Mr. Iger, received an additional cash retainer of $25,000. All retainers are paid in quarterly installments.
Equity-Based Awards.A substantial portion of eachNon-Employee Director’s annual retainer is in the form of equity awards. Under the Apple Inc.Non-Employee Director Stock Plan,Non-Employee Directors are granted RSUs on the date of each annual meeting of shareholders (each, an “Annual Director Award”). All Annual Director Awards vest on February 1 of the following year, subject to continued service on the Board through the vesting date. For 2019, the number of RSUs subject to continued service on the Board through the vesting date. For 2021, the number of RSUs underlying each Annual Director Award was determined by dividing $250,000 by the per share closing price of Apple’s common stock on the date of grant.
A Non-Employee Director who is newly appointed to the Board other than in connection with an annual meeting of shareholders will receive a grant of RSUs upon appointment (an “Initial Director Award”), except that a Non-Employee Director who first joins the Board on or after February 1 of a particular year and prior to the annual meeting for that year, or a director who was an employee of Apple immediately prior to first becoming a Non-Employee Director, will not receive an Initial Director Award. The number of RSUs subject to each Initial Director Award is determined in the same manner as described above for Annual Director Awards, but the award is pro-rated based on the portion of the period that has passed since the last annual meeting. Initial Director Awards are scheduled to vest on the next February 1 following the grant of the award.
30 | Proxy Statement |
Each RSU granted under the Director Stock Plan will be credited with an amount equal to any ordinary dividend paid by Apple, multiplied by the total number of RSUs subject to the award that are outstanding immediately prior to the record date for such dividend. The amounts credited to each RSU are referred to as “dividend equivalents.” Any dividend equivalents credited to RSUs granted under the Director Stock Plan will be subject to the same vesting, payment, and other terms and conditions as the RSUs to which the dividend equivalents relate. The dividend equivalents are meant to treat the RSU award holders consistently with shareholders.
Equipment and Matching Gifts Programs. Apple has an equipment program for the Board under which each Non-Employee Director is eligible to receive, upon request and free of charge, one of each new product introduced by Apple, and is eligible to purchase additional equipment at a discount. Additionally, each Non-Employee Director is eligible to participate in Apple’s matching gifts program to the same extent as Apple employees.
Deferred Compensation Plan. We adopted the Apple Inc. Deferred Compensation Plan (“Deferred Compensation Plan”) in 2018, effective for deferrals beginning in 2019. The Deferred Compensation Plan allows eligible participants, including our Non-Employee Directors, to defer a portion of their eligible compensation, subject to the terms of the Deferred Compensation Plan. The Deferred Compensation Plan is unfunded and unsecured. We do not provide any matching contributions under the Deferred Compensation Plan or allow for deferral of RSUs. None of our Non-Employee Directors participated in the Deferred Compensation Plan in 2021.
Stock Ownership Guidelines. Apple has stock ownership guidelines for our CEO, executive officers, and Non-Employee Directors. Under the guidelines, each Non-Employee Director is expected, within five years after the individual first becomes subject to the guidelines, to own shares of Apple’s common stock that have a value equal to five times their annual cash retainer for serving as a director. Shares may be owned directly by the individual, owned jointly with, or separately by, the individual’s spouse, or held in trust for the benefit of the individual, the individual’s spouse, or the individual’s children. Other than Ms. Lozano and Mr. Gorsky, who joined the Board in calendar year 2021, each Non-Employee Director currently owns shares of Apple’s common stock that have a value at least equal to five times their annual cash retainer.
Summary Governance Directors Officers Compensation Proposals Other Information | Proxy Statement | 31 |
Director Compensation—2021
The following table shows information regarding the compensation earned or paid during 2021 to Non-Employee Directors who served on the Board during the year. Mr. Cook’s compensation is shown in the table entitled “Summary Compensation Table—2021, 2020, and 2019” and the related tables under the section entitled “Executive Compensation.” Ms. Lozano joined the Board in January 2021, and Mr. Gorsky joined in November 2021 after the end of the fiscal year.
Name | Fees Earned or Paid in Cash ($) | Stock Awards | All Other Compensation ($)(2) | Total ($) | ||||||||||||
James Bell | 100,000 | 249,958 | 3,694 | 353,652 | ||||||||||||
Al Gore | 100,000 | 249,958 | 12,178 | 362,136 | ||||||||||||
Andrea Jung | 130,000 | 249,958 | 12,424 | 392,382 | ||||||||||||
Art Levinson | 300,000 | 249,958 | 6,798 | 556,756 | ||||||||||||
Monica Lozano | 75,000 | 286,322 | 7,583 | 368,905 | ||||||||||||
Ron Sugar | 135,000 | 249,958 | 15,187 | 400,145 | ||||||||||||
Sue Wagner | 125,000 | 249,958 | 4,079 | 379,037 |
(1) | In accordance with SEC rules, the amounts shown reflect the aggregate grant date fair value of stock awards granted to Non-Employee Directors during 2021, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC 718”). The grant date fair value for RSUs is measured based on the closing price of Apple’s common stock on the date of grant.
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(2) | The amounts shown reflect the value of one or more products received under the Board’s equipment program during the fiscal year. |
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($)(2) | Total ($) | ||||||||||||
James Bell | 100,000 | 250,032 | 5,805 | 355,837 | ||||||||||||
Al Gore | 100,000 | 250,032 | 10,232 | 360,264 | ||||||||||||
Bob Iger(3) | 125,000 | 250,032 | 23,956 | 398,988 | ||||||||||||
Andrea Jung | 130,000 | 250,032 | 5,356 | 385,388 | ||||||||||||
Art Levinson | 300,000 | 250,032 | 7,890 | 557,922 | ||||||||||||
Ron Sugar | 135,000 | 250,032 | 15,846 | 400,878 | ||||||||||||
Sue Wagner | 100,000 | 250,032 | 4,891 | 354,923 |
Officers This section describes the business experience of our executive officers, other than Mr. Cook, whose biography can be found on page 24.
Ms. Adams, 57, oversees all legal matters, including corporate governance, intellectual property, litigation, compliance, global security, and privacy. Kate joined Apple as General Counsel in November 2017. Prior to joining Apple, Kate served as General Counsel of Honeywell International Inc., a diversified technology and manufacturing company, from September 2008. Prior to joining Honeywell in 2003, Kate was a partner at the law firm of Sidley Austin LLP.
Mr. Maestri, 58, oversees Apple’s accounting, business support, financial planning and analysis, treasury, real estate, investor relations, internal audit, and tax functions. Luca joined Apple in March 2013 and assumed his current position in May 2014, after previously serving as Apple’s Vice President and Corporate Controller. Prior to joining Apple, Luca was Executive Vice President, Chief Financial Officer of Xerox Corporation, a business services and technology company, from February 2011 to February 2013; Chief Financial Officer at Nokia Siemens Networks; and had a 20-year career with General Motors Corporation, including serving as Chief Financial Officer of GM Europe and GM Brazil.
Ms. O’Brien, 55, oversees Apple’s retail and online teams, and Apple’s People team. As the leader of Apple’s retail and online teams, Deirdre supports their work to enrich the lives of millions of Apple customers every year. In her role leading the People team, Deirdre works to help Apple connect, develop, and care for its employees—and to help those employees do the best work of their lives. Deirdre joined Apple in July 1988 and assumed her current position in February 2019. Deirdre’s previous positions with Apple include Vice President, People and Vice President, Operations.
Mr. Williams, 58, oversees Apple’s entire worldwide operations, as well as customer service and support. He leads Apple’s renowned design team and the software and hardware engineering for Apple Watch. Mr. Williams also drives the company’s health initiatives. Jeff joined Apple in June 1998 and assumed his current position in December 2015. Jeff’s previous positions with Apple include Senior Vice President, Operations and Head of Worldwide Procurement. Prior to joining Apple, Jeff worked in a number of operations and engineering roles at IBM from 1985 to 1998.
200% of the target payout opportunity. If the threshold goal is not achieved for a financial performance measure, there is no payout for that financial performance measure. Payouts for our named executive officers under the annual cash incentive program are linearly interpolated for achievement between threshold, target, and maximum performance goal levels. For 2021, the Compensation Committee considered the likelihood of a range of business scenarios and results that could impact net sales and operating income, including the ongoing uncertainty related to the COVID-19 pandemic and related business conditions, a complex macro-economic and socio-political environment, and the alignment between appropriate payout opportunities and strong financial results at threshold, target, and maximum performance goal levels. The Compensation Committee set rigorous net sales and operating income goals for 2021 that required year-over-year growth at each payout opportunity. Specifically, our 2021 threshold net sales and operating income goals were both above the prior year’s results, while our 2021 net sales and operating income target goals required significant year-over-year growth. 2021 Financial Performance Goals and Results For 2021 we reported net sales of $365.8 billion and operating income of $108.9 billion, representing a year-over-year increase of 33% and 64%, respectively. These results significantly exceeded the maximum goals for each of the financial performance measures. ESG Modifier Beginning in 2021, the Compensation Committee incorporated the ESG Modifier into the annual cash incentive program. The ESG Modifier is based on a holistic evaluation by the Compensation Committee of key accomplishments and actions taken during the year to advance our Apple values: accessibility, education, environment, inclusion and diversity, privacy, and supplier responsibility, and key community initiatives. The Compensation Committee may choose to apply the ESG Modifier to adjust the payout amounts upwards or downwards by up to 10% or determine not to make any adjustments. The Compensation Committee will not apply the ESG Modifier to increase an annual cash incentive payout above the overall cap of 200% of the total target payout opportunity under the program.
The Compensation Committee chose Apple values and key community initiatives as the basis for the ESG Modifier because they represent long-standing, business-relevant environmental, social, and governance principles that reflect Apple’s commitment to promoting values-driven leadership. 2021 Annual Cash Incentive Payouts Our 2021 net sales and operating income results significantly exceeded the maximum goals set under the annual cash incentive program resulting in a maximum payout for each of our named executive officers equal to 200% of the total target payout opportunity. Before approving the annual cash incentive payouts, the Compensation Committee reviewed with management the actions and key highlights for 2021 representing progress for each of the Apple values and key community initiatives. The review incorporated an extensive environmental, social, and governance scorecard of qualitative and quantitative actions and measures relevant to the fiscal year and a discussion of continuing areas of opportunity. For example, the Compensation Committee considered the significant commitments and efforts made during 2021 in connection with Apple’s Racial Equity and Justice Initiative, the meaningful actions being taken to build more diverse representation across every part of the business, new strides toward reaching our 2030 carbon neutral goal across our entire business, manufacturing supply chain, and product life cycle, and innovations designed to protect people’s privacy such as app tracking transparency and privacy nutrition labels. The Compensation Committee previously determined it will not apply the ESG Modifier to increase a payout above the maximum payout opportunity for 2021 and approved annual cash incentive payouts equal to the maximum 200% of the total target payout opportunity for each of our named executive officers. No adjustment was made based on the ESG Modifier and the Compensation Committee did not exercise its discretion to reduce any named executive officer’s annual cash incentive payout based on Apple’s performance or the Compensation Committee’s subjective assessment of each individual named executive officer’s overall performance. Long-Term Equity Awards
Performance-Based RSU awards with performance-based vesting are a substantial,at-risk component of our named executive officers’ compensation tied to Apple’s long-term performance. The number of performance-based RSUs that
We measure Relative TSR for the applicable performance period based on the change in each company’s stock price during that period, taking into account any dividends paid during that period, which are assumed to be reinvested in the stock. A20-trading-day averaging period is used to determine the beginning and ending stock price values used to calculate the total shareholder return of Apple and the other companies in the S&P 500. This averaging period mitigates the impact on the long-term Relative TSR results ofone-day or short-term stock price fluctuations at the beginning or end of the performance period. The change in stock price value from the beginning to the end of the period is divided by the beginning stock price value to determine Time-Based RSU awards with time-based vesting align the interests of our named executive officers with the interests of our shareholders by promoting the stability and retention of a high-performing executive team over the longer term. Vesting schedules for time-based awards are generally
Dividend Equivalents All RSUs granted to our employees in 2021, including our named executive officers, have dividend equivalent rights. The dividend equivalents will only pay out if the time-based vesting and performance conditions have been met for the RSUs to which the dividend equivalents relate. 2021 RSU Results CEO RSU Vesting This year marked the 10-year anniversary of Mr. Cook’s tenure as Apple’s CEO and the vesting of the final tranche of the long-term RSU award granted upon his promotion to CEO in 2011 (the “2011 RSU Award”). Mr. Cook earned significant long-term incentives over the course of a decade, aligning his compensation with the extraordinary value created for our shareholders under his leadership.
At grant, the 2011 RSU Award had a time-based vesting schedule with 50% of the RSUs vesting on each of the 5- and 10-year anniversaries of the grant date. The 2011 RSU Award was significantly modified in 2013, at Mr. Cook’s request, The performance condition for Mr. Cook’s 2011 RSU Award required Apple to outperform two-thirds of the companies that were included in the S&P 500 for the entirety of each performance period in order for 100% of the performance-based RSUs allocated to that period to vest. The 2011 RSU Award only had downside risk to Mr. Cook. It did not contain any upside vesting opportunity above 100% of the target number of RSUs, and there was no interpolation for results between the Relative TSR levels set at the bottom, middle, and top third of companies in the S&P 500.
For the final three-year performance period under the 2011 RSU Award from August 25, 2018 through August 24, 2021, Apple’s Relative TSR was at the 97th percentile of the companies that were included in the S&P 500 for the entire performance period. As a result, 100% of the target 1,120,000 performance-based RSUs for this performance period vested on August 24, 2021. Apple’s total shareholder return during this performance period was 191.83%. On August 24, 2021, Mr. Cook also vested in the remaining 3,920,000 time-based RSUs under his 2011 RSU Award.
Other Named Executive Officer Performance-Based RSU Vesting During 2021, Mr. Maestri and Mr. Williams each vested in performance-based RSUs that were granted on October 1, 2017. Ms. Adams vested in performance-based RSUs that were granted on November 13, 2017, her date of hire. Between zero and 200% of the target number of these performance-based RSUs were scheduled to vest based on Apple’s Relative TSR percentile ranking for the applicable performance period, with a maximum 200% vesting for performance at or above the 85th percentile.
For the three-year performance period from the beginning of 2018 through the end of 2020, Mr. Maestri and Mr. Williams each vested in 519,080 performance-based RSUs, representing 200% of the target number of performance-based RSUs. Apple’s Relative TSR was at the 99th percentile of the companies that were included in the S&P 500 and Apple’s total shareholder return during this period was 208.96%.
For the performance period beginning November 13, 2017 through the end of 2020, Ms. Adams vested in 495,856 performance-based RSUs, representing 200% of the target number of performance-based RSUs. Apple’s Relative TSR was at the 99th percentile of the companies that were included in the S&P 500 and Apple’s total shareholder return during this period was 181.64%.
2021 RSU Awards All
2021 Performance-Based RSU Awards Performance-based RSUs were granted to Mr. Cook, Ms. Adams, Mr. Maestri, Ms. O’Brien, and Mr. Williams on September 27, 2020, which Subject to the
If Apple’s TSR for the performance period is negative, the number of performance-based RSUs that will vest is capped at 100% of the target number of performance-based RSUs regardless of our percentile ranking. If Apple’s Relative TSR percentile ranking is above the 25th percentile and between the other levels shown in the table above, the portion of the performance-based RSUs that will vest is linearly interpolated between the two nearest vesting percentages. The target number of performance-based RSUs granted to Mr. Cook was determined by dividing $37.5 million by the closing stock price on the date of grant. The target number of performance-based RSUs granted to Ms. Adams, Mr. Maestri, Ms. O’Brien, and Mr. Williams was determined by dividing $10 million by the closing stock price on the date of grant. The grant date fair values of these awards are reported in the “Summary Compensation Table—2021, 2020, and 2019.” 2021 Time-Based RSU Awards The 2021 time-based RSUs awarded to Mr. Cook, Ms. Adams, Mr. Maestri, Ms. O’Brien, and Mr. Williams were granted on September 27, 2020, which was the first day of Apple’s 2021 fiscal year. Subject to the terms of the award agreements, the vesting schedule for these RSUs is approximately four and one-half years, with three equal installments vesting annually commencing on April 1, 2023 (approximately two and one-half years following the grant date). The April vesting dates for the time-based RSUs were selected to balance the October vesting of the performance-based RSUs and provide regular vesting intervals. The number of time-based RSUs granted to Mr. Cook was determined by dividing $37.5 million by the closing stock price on the date of grant. The target number of time-based RSUs granted to Ms. Adams, Mr. Maestri, Ms. O’Brien, and Mr. Williams was determined by dividing $10 million by the closing stock price on the date of grant. The grant date fair value for these awards is reported in the “Summary Compensation Table—2021, 2020, and 2019.”
Compensation Committee Judgment and Discretion The Compensation Committee, consisting entirely of independent directors, reviews and approves the compensation of Apple’s named executive officers and acts as the administering committee for Apple’s employee equity compensation plans. The Compensation Committee’s executive compensation determinations are subjective and the result of its business judgment, which is informed by the experience of its members and input provided by its independent compensation consultant, our CEO (other than with respect to his own compensation), other members of management, and our shareholders. Each year, the Compensation Committee conducts an evaluation of Apple’s executive compensation program to determine any appropriate changes. In making this determination, the Compensation Committee may consult with its independent compensation consultant and management, as described below; however, the Compensation Committee makes final decisions regarding the compensation paid to our named executive officers based on its own judgment. In determining whether to make changes to our executive compensation program, the Compensation Committee may consider a number of factors, including the size, scope, and performance of our business, evolving compensation trends, financial goals, and shareholders’ interests. The Role of the Compensation Consultant The Compensation Committee selects and retains the services of its own independent compensation consultant and annually reviews the performance of the consultant. As part of the review process, the Compensation Committee considers the independence of the consultant in accordance with SEC and Nasdaq rules. During 2021, the Compensation Committee’s independent compensation consultant, Pay Governance, provided no services to Apple other than services for the Compensation Committee, and worked with Apple’s management, as directed by the Compensation Committee, only on matters for which the Compensation Committee is responsible. At the Compensation Committee’s request, Pay Governance regularly attends Compensation Committee meetings. Pay Governance also communicates with the Compensation Committee or the Chair of the Compensation Committee outside committee meetings regarding matters related to the Compensation Committee’s responsibilities. In 2021, the Compensation Committee generally sought input from Pay Governance on a range of external market factors related to Apple’s compensation programs, CEO pay, environmental, social, and governance performance metrics and other The Role of the Chief Executive Officer At the Compensation Committee’s request, Mr. Cook provides input regarding the performance and compensation of the other named executive officers. The Compensation Committee considers Mr. Cook’s evaluation and his direct knowledge of each named executive officer’s performance and contributions when making compensation decisions. Mr. Cook is not present during Compensation Committee voting or deliberations regarding his own compensation.
The Role of Shareholders Shareholders are provided the opportunity to cast an annual advisory vote on the compensation of our named executive officers and have indicated their strong support for the compensation of our named executive officers in each of the past six years. Most recently, 95% of votes cast on the say-on-pay proposal at the 2021 Annual Meeting voted in favor of our executive compensation program. We have ongoing discussions with many of our shareholders regarding various topics, including company performance and strategy, corporate governance, executive compensation, and environmental, social, and governance topics. The Compensation Committee considers these discussions while reviewing our executive compensation program and will continue to consider shareholder feedback and the results of say-on-pay votes when making future compensation decisions. The Role of Peer Companies The Compensation Committee reviews and approves peer group composition each year. With the assistance of Pay Governance, the Compensation Committee identified groups of companies to serve as market reference points for compensation comparison purposes for 2021. A primary peer group was developed for reference consisting of U.S.-based, stand-alone, publicly traded companies in the 2021 Primary Peer Group
Apple Relative to Primary Peers
As shown above, Apple remains considerably larger than the typical company in the primary peer group with approximately five times the revenue and approximately nine times the market capitalization of the median peer company data for each of the screening criterion. Revenue shown is based on the trailing 12 months revenue of each of our peer companies ending closest to our 2021 fiscal year-end. Market capitalization for peer group companies is the amount provided by Bloomberg L.P. as of September 24, 2021, the last trading day of Apple’s 2021 fiscal year. A secondary peer group of premier companies that have iconic brands or are 2021 Secondary Peer Group
The Compensation Committee considers peer group data provided by its independent compensation consultant and reviews compensation practices and program design at peer companies to inform its decision-making process so it can set total compensation levels that it believes are commensurate with the relative size, scope, performance and profitability of Apple. The Compensation Committee, however, does not set compensation components to meet specific benchmarks as compared to peer companies, such as targeting salaries or total compensation at a specific market percentile. References in this Compensation Discussion and Analysis to peer companies include both the primary and the secondary peer group companies. Other Benefits Our named executive officers are eligible to participate in our health and welfare programs, Employee Stock Purchase Plan, 401(k) plan, Deferred Compensation Plan. Our named executive officers are eligible to defer a portion of their eligible compensation under the terms of the Deferred Compensation Plan, including a portion of their base salary and annual cash incentive opportunity. Security and Private Aircraft. We provide risk-based, business-related, and personal security services
In the interests of security and efficiency based on our global profile and the highly visible nature of Mr. Cook’s role as CEO, the Board requires that Mr. Cook use private aircraft for all business and personal travel. Mr. Cook recognizes imputed taxable income and is not provided a tax reimbursement for personal use of private aircraft.
The time-based RSU award agreements for
Governance and Other Considerations Tax Deductibility of Compensation Expense. Section 162(m) of the Internal Revenue Code generally places a $1 million limit on the amount of compensation a publicly held company can deduct in any tax year on compensation paid to each “covered Compensation Clawback. The terms of all outstanding RSU awards held by our named executive officers allow us to recoup any shares or other amount that may be paid in respect of RSUs in the event the
Apple or at any time thereafter, the Prohibition on Hedging, Pledging, and Short Sales. We prohibit short sales, hedging, and transactions in derivatives of Apple securities for all Apple personnel, including directors, officers, employees, independent contractors, and consultants. In addition, we prohibit pledging of Apple stock as collateral by directors and executive officers of Apple. We allow for certain portfolio diversification transactions, such as investments in exchange funds. Stock Ownership Guidelines. Under our stock ownership guidelines, Mr. Cook is expected to own shares of Apple stock that have a value equal to 10 times his annual base salary. All other executive officers are expected to own shares that have a value equal to three times their annual base salary within five years of the officer first becoming subject to the guidelines. Risk Considerations. In establishing and reviewing Apple’s executive compensation program, the Compensation Committee considers whether the program encourages unnecessary or excessive risk-taking and has concluded that it does not. See the section entitled “Corporate Governance–Board Oversight of Risk Management” above for an additional discussion of risk considerations.
Summary Compensation The following table, footnotes, and related narrative show information regarding the total compensation of each named executive officer for
The amounts in the salary, bonus, andnon-equity incentive plan compensation columns of the “Summary Compensation
Grants of Plan-Based The following table shows information regarding the incentive awards granted to the named executive officers for
Description of Plan-Based Awards Non-Equity Incentive Plan Awards.Each of the“Non-Equity Incentive Plan Awards” shown in the table entitled “Grants of Plan-Based
Time-Based RSUs.The material terms of the time-based RSUs granted to Performance-Based RSUs.The material terms of the performance-based RSUs granted to
Outstanding Equity The following table shows information regarding the outstanding equity awards held by each of the named executive officers as of September
Stock The following table shows information regarding the vesting during
Non-Qualified Deferred Compensation—2021 The following table shows information regarding the participation of our named executive officers in the Deferred Compensation Plan as of September 25, 2021.
Description of Non-Qualified Deferred Compensation Our named executive officers and Non-Employee Directors are eligible to participate in the Deferred Compensation Plan. Deferred Compensation Plan participants may elect to defer up to 50% of their annual base salary and commissions and up to 90% of their eligible cash bonus, or up to 100% of their annual cash retainer in the case of Non-Employee Directors, by timely completing a deferral election form. Amounts deferred under the Deferred Compensation Plan, as adjusted for applicable earnings gains and losses and fees, are credited to an account in the participant’s name and remain fully vested at all times. Participants may select at any time from a diversified menu of notional investment options that generally mirror the investment options of Apple’s 401(k) plan, and the value of their Deferred Compensation Plan account balance may increase or decrease based on the performance of their selected investment options. In 2021, annual returns on the investment options available for the Deferred Compensation Plan generally ranged from -0.90% to 69.16%. Deferred Compensation Plan participants may elect to receive distributions of their deferred amounts either upon separation from service or as of a specified in-service distribution date. Distributions will be made in a lump sum payment unless the participant elects installment payments between two and 10 years. A Deferred Compensation Plan participant may also request to receive a hardship distribution on account of an eligible unforeseeable emergency. If a Deferred Compensation Plan participant dies prior to receiving a complete distribution of their account, the remaining account will be paid to their beneficiaries in a lump sum by December 31 of the year following the participant’s death. Potential Payments Upon Termination or Change of Control We do not have any cash severance arrangements with our named executive officers, and none of
Equity Acceleration Time-Based RSUs. Performance-Based The following table shows the estimated amounts that the named executive officers would have become entitled to under the terms of all RSUs outstanding
CEO Pay
In 2021, we selected a new median employee due to changes in our hiring trends and material changes to our employee compensation disclosure. We determined our median compensated employee by using base salary, bonuses, commissions, and grant date fair value of equity awards granted to employees in We calculated the median compensated
Election of Directors
Ratification of Appointment of Independent Registered Public Accounting Firm
Fees Paid to Auditors The following table shows the fees billed by Apple’s independent registered public accounting firm for the years ended September
Policy on Audit CommitteePre-Approval of Audit andNon-Audit Services Performed by the Independent Registered Public Accounting Firm Apple maintains an auditor independence policy that, among other things, prohibits Apple’s independent registered public accounting firm from performingnon-financial consulting services for Apple, such as information technology consulting and internal audit services. This policy mandates that the Audit Committee approve in advance the audit and permissiblenon-audit services expected to be performed each year by the independent registered public accounting firm and the related budget, and that the Audit Committee be provided with quarterly reporting on actual spending. This policy also mandates that Apple may not enter into engagements with Apple’s independent registered public accounting firm for other permissible non-audit services without the expresspre-approval of the Audit Committee. In accordance with this policy, the Audit Committeepre-approved all services performed by Apple’s independent registered public accounting firm in
Advisory Vote to Approve Executive Compensation
Approval of the Apple Inc. 2022 Employee Stock Plan
As of September 25, 2021, our overhang was 5.7%, and our burn rate in 2021 was 1.34%. Assuming our shareholders approve the 2022 Plan, our overhang will be 8.4%. For this purpose, “overhang” is defined as (A) the number of shares subject to awards granted to employees, plus (B) shares available for future grants, divided by the sum of shares outstanding plus the amounts described in clauses (A) and (B). The overhang calculation excludes shares available for future issuance or grant under our employee stock purchase plan or our Director Stock Plan, including shares subject to outstanding awards. Based on a review of our historical and projected grant practices, we estimate that the shares reserved for grant under the 2022 Plan should meet Apple’s equity grant needs for approximately three years. The shares reserved may, however, last for more or less than three years depending on currently unknown factors, such as the number of grant recipients, future grant practices, and Apple’s stock price. Description of the 2022 Plan The following is a summary of the principal features of the 2022 Plan. This summary does not purport to be a complete description of all of the provisions of the 2022 Plan. It is qualified in its entirety by reference to the full text of the 2022 Plan which is included in its entirety as Annex A to this Proxy Statement. Share Reserve Maximum Share Reserve. The maximum number of shares that may be issued or transferred pursuant to awards under the 2022 Plan is equal to the sum of: (i) 510 million shares, (ii) the number of shares available for new award grants under the 2014 Plan on the date that the shareholders approve the 2022 Plan (the “Approval Date”); (iii) the number of shares subject to stock options granted under the 2014 Plan that are outstanding as of the Approval Date which expire or terminate after the Approval Date; and (iv) two times the number of shares subject to RSUs or restricted awards granted under the 2014 Plan that are outstanding as of the Approval Date that are forfeited or terminated or with respect to which shares are withheld to satisfy tax withholding obligations after the Approval Date. However, in no event will the number of shares available for issuance under the 2022 Plan exceed 1,274,374,682 shares. The number of shares described in this paragraph are subject to adjustment in the event of certain capitalization events. Unless the Compensation Committee provides otherwise, no fractional shares will be issued under the 2022 Plan. The Compensation Committee has the authority to determine whether fractional shares will be rounded down or a cash payment will be made in lieu of fractional shares. Shares issued with respect to full-value awards (RSU or restricted stock awards) granted under the 2022 Plan are counted against the 2022 Plan’s aggregate share limit as two shares for every one share actually issued in connection with the full-value award. For example, if 100 shares are issued with respect to an RSU award granted under the 2022 Plan, 200 shares will be counted against the 2022 Plan’s aggregate share limit in connection with that award. Other Share Counting Rules. The following are other rules for counting shares against the applicable share limits of the 2022 Plan: For awards settled in cash or a form other than shares, the shares that would have been delivered had there been no such cash or other settlement will not be counted against the shares available for issuance under the 2022 Plan.
For shares that are delivered pursuant to the exercise of a stock appreciation right or stock option, the number of underlying shares to which the exercise related shall be counted against the applicable share limits, as opposed to the number of shares actually issued. For example, if a stock option relates to 1,000 shares and is exercised in full on a cashless basis at a time when the payment due to the participant is 150 shares, then the 1,000 shares for which the option was exercised shall be charged against the applicable share limits. Except as otherwise provided below, shares that are subject to awards that expire or for any reason are cancelled or terminated, are forfeited, fail to vest, or for any other reason are not paid or delivered under either the 2014 Plan or the 2022 Plan will again be available for subsequent awards under the 2022 Plan. Any such shares subject to awards other than stock options and stock appreciation rights granted under either the 2014 Plan or the 2022 Plan will become available taking into account the 2:1 premium share counting rule applicable at the time of granting these types of awards. For example, if a 100 share RSU award made under the 2014 Plan or the 2022 Plan is forfeited before it vests, then 200 shares would again be available for subsequent awards under the 2022 Plan. Shares that are exchanged by a participant or withheld by Apple as full or partial payment in connection with any award other than an option or stock appreciation right granted under either the 2014 Plan or the 2022 Plan, as well as any shares exchanged by a participant or withheld to satisfy the tax-related items (as defined in the 2022 Plan) arising in connection with any such award, will be available for subsequent awards under the 2022 Plan. Any such shares will become available taking into account the 2:1 premium share counting rule, discussed above, for these types of awards. For example, given that a 100 share RSU award made under either the 2014 Plan or the 2022 Plan counted as 200 shares against such plan’s share limit because of the 2:1 premium share counting rule, if we deliver 60 shares to the participant and withhold 40 shares to cover tax withholding obligations, 80 shares (the 40 that were withheld multiplied by two to give effect to the 2:1 premium share counting rule) would again be available for subsequent awards under the 2022 Plan. Shares that are exchanged by a participant or withheld by Apple to pay the exercise price of an option or stock appreciation right granted under the 2022 Plan, as well as any shares exchanged or withheld to satisfy the tax withholding obligations related to any option or stock appreciation right, will not be available for subsequent awards under the 2022 Plan. Shares issued in connection with awards that are granted by or become obligations of Apple through the assumption of, or in substitution for, awards in connection with an acquisition of another company will not count against the shares available for issuance under the 2022 Plan unless determined otherwise by Apple, and such awards may reflect the original terms of the related award being assumed or substituted for and need not comply with other specific terms of the 2022 Plan. Individual Award Limits No participant may be granted options or stock appreciation rights during any fiscal year covering, in the aggregate, in excess of 7,000,000 shares, subject to adjustment in the event of certain capitalization events. In addition, no participant may be granted stock grants or restricted stock units during any fiscal year covering, in the aggregate, in excess of 7,000,000 shares, subject to adjustment in the event of certain capitalization events.
Administration The Compensation Committee administers the 2022 Plan. Eligibility and Types of Awards Under the 2022 Plan The 2022 Plan permits the granting by the Compensation Committee of stock options, stock appreciation rights, stock grants and RSUs. Stock appreciation rights may be awarded in combination with stock options or stock grants, and such awards shall provide that the stock appreciation rights will not be exercisable unless the related stock options or stock grants are forfeited. Employees and consultants of Apple and any parent or subsidiary of Apple are eligible to participate in the 2022 Plan. Employees include our executive officers and directors whom are employees. Non-Employee Directors are not eligible to participate. As of the end of the fiscal year, we had approximately 154,000 full-time equivalent employees, including executive officers, who would be eligible to participate in the 2022 Plan. Historically, we have not granted equity awards to consultants and do not have current plans to grant to consultants. RSUs The Compensation Committee may grant RSUs under the 2022 Plan. Participants are not required to pay any consideration to Apple at the time of grant of an RSU. The Compensation Committee may grant RSUs with time-based vesting or vesting upon satisfaction of performance goals and other conditions. The Compensation Committee may provide for dividend equivalent rights on RSUs awarded under the 2022 Plan based on the amount of dividends paid on outstanding shares of our common stock. Any dividend equivalent rights that are awarded will be subject to forfeiture and termination to the same extent as the corresponding RSUs to which the dividend equivalent rights relate. When a participant satisfies the conditions of an RSU award, we may settle the award (including any related dividend equivalent rights) in shares, cash or any combination of both, as determined by the Compensation Committee, in Performance-Based Awards
share or share per capita basis, (d) against the performance of Apple as a whole or against particular entities, segments, operating units or products or (e) on a pre-tax or after tax basis. Stock Options The Compensation Committee may grant nonstatutory stock options or incentive stock options, which are entitled to potentially favorable tax treatment, under the 2022 Plan. The Compensation Committee will
The Compensation Committee may award stock grants, which may be subject to Stock Appreciation Rights The Compensation Committee may grant stock appreciation rights under the 2022 Plan. The vesting schedule and number of shares covered by each stock appreciation right granted to a participant will be determined by the Compensation Committee. The Compensation Committee may grant stock appreciation rights with time-based vesting, or vesting upon satisfaction of performance goals, or other conditions. The exercise price of a stock appreciation right will be established by the Compensation Committee and may not be less than 100% of the fair market value of a share on the date of grant. Upon exercise of a stock appreciation right, the participant will receive payment from Apple in an amount determined by multiplying (a) the excess of (i) the fair market value of a share on the date of exercise over (ii) the exercise price times (b) the number of shares with respect to which the stock appreciation right is exercised. Stock appreciation rights may be paid in cash, shares, or any combination of both, as determined by the Compensation Committee, in its sole discretion, at the time of grant. The term of a stock appreciation right shall not exceed 10 years from the date of grant. Dividend equivalent rights may not be granted on stock appreciation rights awarded under the 2022 Plan.
In no case, except due to an adjustment to reflect a stock split or other event referred to under “Adjustments” below, and except for any repricing that may be approved by shareholders, will the Compensation Committee (1) amend an outstanding stock option or stock appreciation right to reduce the exercise price or base price of the award, (2) cancel, exchange, or surrender an outstanding stock option or stock appreciation right in exchange for cash or other awards for the purpose of repricing the award, (3) cancel, exchange, or surrender an outstanding stock option or stock appreciation right in exchange for an option or stock appreciation right with an exercise or base price that is less than the exercise or base price of the original award, or (4) take any other action that is treated as a repricing under U.S. generally accepted accounting principles. Transferability of Awards Except as described below, awards under the 2022 Plan generally are not transferable by the recipient other than by will or the laws of descent and distribution, and stock options and stock appreciation rights are generally exercisable, during the recipient’s lifetime, only by the recipient. Any amounts payable or shares issuable pursuant to an award generally will be paid only to the recipient or the recipient’s beneficiary or representative. The Compensation Committee has discretion, however, to establish written conditions and procedures for the transfer of awards to other persons or entities, provided that such transfers comply with applicable federal and state securities laws and are not made for value, other than nominal value or certain transfers to family members. Change of Control Generally, upon the occurrence of a change of control (as defined in the 2022 Plan), all awards then-outstanding under the 2022 Plan will terminate, unless the Compensation Committee provides for the cash settlement, assumption, substitution, or other continuation of the award, provided that the Corporate Actions The existence of the
Adjustments As is customary in incentive plans of this nature, each share limit and the number and kind of shares available under the 2022 Plan and any outstanding awards, as well as the exercise or purchase prices of awards, and performance targets under certain types of performance-based awards, are subject to adjustment in the event of certain reorganizations, mergers, combinations, including a change of control of Apple, recapitalizations, stock splits, stock dividends, or other similar events that change the number or
kind of shares outstanding, and extraordinary dividends or distributions of property to the shareholders, to the extent necessary to preserve the level or economic value of incentives intended by the 2022 Plan and outstanding awards. Amendment and Termination The Board may amend the 2022 Plan at any time and for any reason, provided that any such amendment will be subject to shareholder approval to the extent required by applicable laws, regulations, or rules. The Board may terminate the 2022 Plan at any time and for any reason. Unless terminated earlier by the Board, the 2022 Plan will terminate on November 8, 2031, subject to any extension that may be approved by the Board and the shareholders prior to or on such date. The termination or amendment of the 2022 Plan may not adversely affect any award previously made under the 2022 Plan except that any amendments the Compensation Recoupment Policy Awards granted under the 2022 Plan will be subject to any provisions of applicable law providing for the recoupment or clawback of incentive compensation, such as provisions imposed pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act; the terms of any Apple recoupment, clawback or similar policy in effect at the time of grant of the award; and any recoupment, clawback or similar provisions that may be included in the applicable award agreement. Federal Income Tax Consequences The following is a brief summary of the U.S. federal income tax consequences applicable to awards granted under the 2022 Plan based on the federal income tax laws in effect on the date of this Proxy Statement. This summary is not intended to be exhaustive and does not address all matters relevant to a particular participant based on their specific circumstances. The summary expressly does not discuss the income tax laws of any state, municipality, or non-U.S. taxing jurisdiction, or the gift, estate, excise (including the rules applicable to deferred compensation under Section 409A of the Internal Revenue Code), or other tax laws other than U.S. federal income tax law. The following is not intended or written to be used, and cannot be used, for the purposes of avoiding taxpayer penalties. Because individual circumstances may vary, we advise all participants to consult their own tax advisor concerning the tax implications of awards granted under the 2022 Plan. A recipient of a stock option or stock appreciation right will not have taxable income upon the grant of the stock option or stock appreciation right. For nonstatutory stock options and stock appreciation rights, the participant will recognize ordinary income upon exercise in an amount equal to the difference between the fair market value of the shares and the exercise price on the date of exercise. Any gain or loss recognized upon any later disposition of the shares generally will be a capital gain or loss. The acquisition of shares upon exercise of an incentive stock option will not result in any taxable income to the participant, except possibly for purposes of the alternative minimum tax. The gain or loss recognized by the participant on a later sale or other disposition of such shares will either be long-term
capital gain or loss or ordinary income, depending upon whether the participant holds the shares for the legally-required period of two years from the date of grant and one year from the date of exercise. If the shares are not held for the legally-required period, the participant will recognize ordinary income equal to the lesser of (i) the difference between the fair market value of the shares on the date of exercise and the exercise price, or (ii) the difference between the sales price and the exercise price. For awards of stock grants, the participant will not have taxable income upon the receipt of the award, unless the participant elects to be taxed at the time of the stock is granted rather than when it becomes vested. The stock grants will generally be subject to tax upon vesting as ordinary income equal to the fair market value of the shares at the time of vesting less the amount paid for such shares, if any. A participant is not deemed to receive any taxable income at the time an award of RSUs is granted. When vested RSUs (and dividend equivalents, if any) are settled and distributed, the participant will recognize ordinary income equal to the amount of cash or the fair market value of shares received less the amount paid for such RSUs, if any. If the participant is an employee or former employee, the amount a participant recognizes as ordinary income in connection with any award is subject to tax-related items (not applicable to incentive stock options) and we are allowed a tax deduction equal to the amount of ordinary income recognized by the participant. Future Plan Benefits As of the date of this Proxy Statement, no awards have been granted under the 2022 Plan. Awards under the 2022 Plan may be made at the discretion of the Compensation Committee, and any awards that may be made and any benefits and amounts that may be received or allocated under the
Shareholder Proposal Reincorporate with Deeper Purpose
RESOLVED: Shareholders request our Board of
SUPPORTING STATEMENT: Apple’s CEO Tim Cook signed the Business Roundtable Statement on
However, Apple incorporated with an uninspiring purpose: “The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Rechartering around deeper social purposes would help Apple align all actions around common goals. It would motivate shareholders, employees, and other stakeholders, guiding our Company on a more inspiring mission than engaging “in any lawful act or activity.” Purpose is the most distilled form of Our employees are striving to address issues such as climate risk, wealth inequality, diversity, equity, and inclusion. We should identify employee values through Slack3 or other channels and adopt specific social purposes in better alignment. Apple
A recent study determined that listed companies create annual social and environmental costs of $2.2 trillion. These costs have many sources, including pollution, climate change and employee stress.6 Being guided by a legally adopted North Star would likely lead Apple to further reduce externalized costs and even more fully engage stakeholders. By adopting specific social purposes our stakeholders will know Apple’s values are built into Apple’s very reason for existing. Those social purposes would not be seen as public relations statements that can be changed according to the latest fad. Our social purposes will be our North Star, guiding and engaging stakeholders on a path to a better future. Please vote for: Reincorporate with Deeper Purpose–Proposal 5
Apple’s Statement in Opposition to Proposal No.
Shareholder Proposal Transparency Reports In December 2020, 154 human rights organizations wrote to CEO Tim Cook regarding Apple’s complicity with the Chinese government’s human rights atrocities, noting that “[e]ven though...app removals gravely affect freedom of expression and access to information, Apple’s Transparency Report currently does not disclose such actions beyond a number.” The New York Times reported in May 2021: “... Apple has Apple’s transparency report for the
Shareholders are deeply concerned about a material failure in Apple’s transparency reporting that seemingly highlights a contradiction between Apple’s human rights policy and its actions regarding China and its occupied territories, which represent almost a third of Apple’s customer base. This poses significant legal, reputational, and financial risk to Apple and its shareholders. Resolved, shareholders request the Board of Directors revise the Company’s Transparency Reports to provide clear explanations of the number and categories of app removals from the app store, in response to or in anticipation of government requests, that may reasonably be expected to limit freedom of expression or access to information. Such revision may exclude proprietary or legally privileged information. Supporting Statement: Proponents suggest the company include in its Transparency Reports, or explain why it cannot disclose:
Apple’s Statement in Opposition to Proposal No. 6
our website for developers.2 Even more information about the App Store is available at apple.com/app-store, where customers and developers can learn more about how Apple manages the App Store to make it a safe and trusted place to discover and download apps. App Store policies.The guiding principle of the App Store is simple—we want to provide a safe experience for users to get apps and a great opportunity for all developers to be successful. We do this by offering a highly curated App Store where every app is reviewed by experts, and an editorial team helps users discover new apps every day. For everything else, there is always the open Internet and web browser apps to reach all users outside of the App Store. As stated in Apple’s Human Rights Policy—Our Commitment to Human Rights,3 and in All apps worldwide are screened for quality and illegal or harmful content. As part of the review process, Apple makes a good faith effort to ensure illegal content does not end up on a country’s storefront. For example, in certain jurisdictions, gambling apps may be illegal or require a license to operate, and our teams seek to screen apps proposing to operate in violation of local law or without a valid license. Apple does not “proactively censor” apps, as suggested in the proposal, Board oversight.Apple’s Board plays a vital and important role overseeing this work. In 2020, our Board adopted Apple’s Human Rights Policy on behalf of the company. Our General Counsel oversees implementation of the policy and reports to
As described above, Apple already provides detailed information in
For all of the reasons above, the Board recommends a vote AGAINST Proposal No.
Shareholder Proposal Report on Forced Labor
number of suppliers against which Apple has taken
SUPPORTING STATEMENT Apple relies on over 200 suppliers1 globally for product components. These suppliers and Apple’s Code of Conduct (2005) lists forced labor as a ‘core violation’ of its policy, with suppliers required to ‘ensure that all work is voluntary’ and Apple’s Human Rights Policy (2020) states its desire ‘to be It has been reported that at least nine4 companies in Apple’s supply chain participate in the government of Following evidence since 2017 of millions of Uyghurs and other Turkic Muslims being forced into internment camps and related labour programs5, the Parliaments of the UK and Canada and the US State Department recognized this as a genocide.6
US Congress is actively working to pass legislation to create a ‘rebuttable presumption’ that goods from the Uyghur region are made with forced labor and will be prohibited from entering the US unless ‘clear and convincing’ evidence can be shown to the contrary.7 The proposed report is intended to mitigate this regulatory risk, given Apple’s dependence on suppliers operating under a government accused of genocide. We urge shareholders to vote for this Proposal.
Apple’s Statement in Opposition to Proposal No.
Zero tolerance for forced labor.At Apple, people come first in everything we do. Our respect for human rights includes our commitment to ensuring everyone is treated with dignity and respect across our worldwide supply chain. Apple has zero tolerance for forced labor, and looking for the presence of forced labor is part of every supplier assessment we conduct. We uphold the highest standards in the industry. The Apple Supplier Code of Conduct, Apple Supplier Responsibility Standards, and Apple Human Rights Policy outline our requirements for suppliers in the areas of labor and human rights, health and safety, environment, management systems, and ethics. We continuously review our suppliers to verify that they can meet or exceed our strict standards and provide training and toolkits to help them better understand how to meet these standards if needed. As part of these reviews, independent, third-party assessments are conducted at supplier facilities, which verify key employee documentation, investigate hiring practices, and conduct extensive interviews with workers in their native languages and without their managers present. We conduct supplier assessments, including surprise assessments, in the 53 countries across our supply chain. The protections apply across the supply chain, regardless of a person’s job or location. Any violation of our policies has immediate consequences, including possible business termination. In 2020, Apple and our independent third-party auditors conducted 1,121 assessments of our suppliers around the world. In addition, we interviewed more than 57,000 workers and undertook anonymous surveys of a further 196,000 workers across 135 facilities in their native languages to ensure we understand their experiences. Throughout this we found no evidence of forced labor anywhere in our worldwide supply chain. This proposal cites media reports alleging incidents of forced labor in global supply chains and references nine suppliers. Between April 2020 and December 2021, we audited each of these nine suppliers with a total of 23 audits among the companies, including 10 unannounced audits, and we did not find any evidence of forced labor on any Apple production lines. Apple also conducted extensive due diligence, and despite restrictions due to COVID-19, we were able to dispatch independent, third-party investigators to these supplier facilities. The teams verified key documentation, investigated hiring practices, and interviewed over 2,300 randomly-selected workers in local languages across these sites and without their managers present. Interviewed workers are contacted after Vote Required Approval of Proposal No. 7 requires the affirmative vote of (i) a majority of the shares present or represented by proxy and voting at the Annual Meeting and (ii) a majority of the shares required to constitute a quorum. The Board recommends a vote AGAINST Proposal No. 7.
the assessment to confirm that they have not experienced any retaliation as a result of speaking with auditors. Through this due diligence, we found no evidence of forced labor, and we continue our efforts to seek to ensure workers are treated with dignity and As part of our process for identifying potential new suppliers, we rigorously evaluate the risks, including labor and human rights risks, associated with prospective suppliers well before they begin working with Apple. We conduct Facility Readiness Assessments, which are thorough reviews designed to ensure that potential risks to people are fully rectified prior to the start of production. In 2020, we completed 112 Facility Readiness Assessments, and eight percent of prospective suppliers evaluated for these risks, including forced labor risks, were prevented from entering Apple’s supply chain. Our standards often go beyond legal requirements. One example of this is by enforcing a zero recruitment fees policy, even in places where these fees, paid by supplier employees to secure a job, are legally permitted. In the event that we discover recruitment fees were paid by supplier employees, we require our suppliers to directly repay their employees in full. Since 2008, we have required suppliers to repay $32.4 million to 36,980 supplier employees. Apple has pioneered tools and training for our suppliers and the labor agents that recruit employees for them to address this issue at its roots, and we have openly shared the tools with companies across multiple industries. Protecting the people in our supply chain. We require our suppliers to provide their employees with training on their workplace rights. Since 2008, over 21.5 million supplier employees have received training on their workplace rights under local labor laws and the human rights protections outlined in our Supplier Code of We work collaboratively with a range of stakeholders, including governments, industry associations, and non-governmental organizations devoted to the promotion and respect of human rights. Every year we
standards beyond our supply chain and effect progress more quickly. Apple Transparent reporting.Since 2007, Apple has publicly released reports that contain extensive information and disclosures about the extent to
Apple reports at least annually on the Board oversight.In 2020, the Board adopted Apple’s Human Rights Policy on behalf of the company. The policy governs how we treat everyone, including people at every level of our supply chain. Our General Counsel oversees implementation of our Human Rights Policy and reports to the Board and its committees on progress and any significant issues identified in the diligence process. In addition, our Audit Committee, consisting entirely of independent directors, assists the Board in monitoring our significant business risks, including operational and reputational exposures that may relate to human rights issues. As described above, Apple has already publicly disclosed through a number of reports the extent to which our policies and procedures effectively protect workers in our supply chain from forced labor. Based on our existing policies, extensive auditing and rigorous oversight of suppliers, active Board oversight, and the comprehensive information that is already publicly provided to our shareholders and other stakeholders, Apple believes that the additional report requested by the proponent would be duplicative and unnecessary. For all of the reasons above, the Board recommends a vote AGAINST Proposal No.
Shareholder Proposal Pay Equity Whereas: Pay inequity persists across race and gender. Black workers’ hourly median earnings have fallen 3.6 percent since 2000, representing 75.6 percent of white wages. The median income for women working full time is 82 percent that of men. Intersecting race, Black women make 63 cents, Native women 60 cents, and Latina women 55 cents. At the current rate, women will not reach pay equity until 2059, Black women until 2130, and Latina women until 2224. Citigroup estimates closing minority and gender wage gaps 20 years ago could have generated 12 trillion dollars in additional income and contributed 0.15 percent to United States GDP annually. PwC estimates closing the gender pay gap could boost Organization for Economic Cooperation and Development (OECD) countries’ economies by 2 trillion dollars annually. Actively managing pay equity is associated with improved representation, and diversity is linked to superior stock performance and return on equity. Of note, Black employees represent 9 percent of Apple’s workforce, but only 4 percent of leadership. Women only account for 34 percent of Apple’s workforce and 31 percent of leadership. Pay gaps are literally defined as the median pay of minorities compared to non-minorities and the median pay of women compared to men. They are considered the valid way of measuring gender pay inequity by the United States Census Bureau, Department of Labor, OECD, and International Labor Organization. Best practice pay equity reporting consists of two parts: 1. unadjusted median pay gaps, assessing equal opportunity to high paying roles, 2. statistically adjusted gaps, assessing pay between minorities and non-minorities, men and women, performing similar roles. Apple has committed to statistically adjusted pay equity but ignores unadjusted median gaps, which address the structural bias women and underrepresented minorities face regarding job opportunity and pay. The Equal Employment and Opportunity Commission now mandates pay data reporting, across race and gender, as workforce diversity data alone is insufficient to assess pay inequity. The United Kingdom mandates disclosure of median gender pay gaps and is considering race and ethnicity reporting. Apple reported a 7 percent median base pay gap and a 29 percent bonus gap for U.K. employees. Resolved: Shareholders request Apple report on median pay gaps across race and gender, including associated policy, reputational, competitive, and operational risks, and risks related to recruiting and retaining diverse talent. The report should be prepared at reasonable cost, omitting proprietary information, litigation strategy and legal compliance information. Racial/gender pay gaps are defined as the difference between non-minority and minority/male and female median earnings expressed as a percentage of non-minority/male earnings (Wikipedia/OECD, respectively). Supporting Statement: An annual report adequate for investors to assess performance could, with board discretion, integrate base, bonus and equity compensation to calculate:
percentage median racial/minority/ethnicity pay gap, US and/or by country, where appropriate
Apple’s Statement in Opposition to Proposal No. 8
modeling. This rigorous review considers annual total compensation, including base salary, bonuses, and RSUs, as well as a variety of data related to pay, including job level, location, performance ratings, and tenure. We are also committed to closing any pay gap we find at the intersections of gender and race and ethnicity in our U.S. workforce. To help ensure internal equity, we target diverse interview panels and candidate slates so diversity is reflected at every stage of the hiring process. Moreover, to avoid perpetuating any pay inequity created by previous companies, we do not ask candidates for compensation history, and our recruiters develop offers of employment based on the compensation of current Apple employees in similar roles. During our annual compensation planning process, the People team uses analytics to assess promotion rates, performance ratings distribution, and pay metrics for women compared to men and, in the United States, for underrepresented groups compared to non-underrepresented groups. We also seek to pay a highly competitive minimum wage in the United States, and provide all employees opportunities for stock ownership in the company. We continue to focus on increasing diverse representation at every level of the company to help Apple become an even better reflection of the world we live in, and we are proud of the progress we’ve made. As published on our website, between 2014 and 2020, the number of employees from underrepresented communities has increased by 64 percent in the United States, and makes up nearly 50 percent of Apple’s U.S. workforce. The number of Hispanic/Latinx employees at Apple in the United States has grown by more than 80 percent during this period, with a 90 percent increase in leadership. The number of Black employees at Apple in the United States has grown by more than 50 percent, with a 60 percent increase in leadership, and the number of female employees at Apple worldwide has grown more than 70 percent, with an 85 percent increase in leadership during this time. Leadership roles include managers at all levels of our company. Transparent reporting. We share our progress on our Inclusion and Diversity website,2 which provides data on the ratio of women and people from underrepresented communities in our workforce, as well as within tech, nontech, leadership, retail and retail leadership roles. We also share on our website metrics regarding hiring for leadership positions, R&D positions, and R&D leadership positions. Although we do not use the Federal Employer Information Report EEO-1 to assess progress, we are one of a small group of large companies making these reports publicly available, and have been doing so since 2015. Fostering an inclusive culture to promote representation. At Apple, we strive to create a collaborative culture of inclusion, growth, and originality, where all employees can thrive. From day one, Apple employees have access to our career development programs, ongoing inclusion and diversity education, and support throughout their career journey. For example, our Career Experiences program provides employees from our stores, retail customer care, and AppleCare teams the opportunity to spend time on a corporate career rotation. Participants build new skills, while host teams benefit from their team members’ new perspectives, talent, and passion. Participation has grown by over 30 percent since it began in 2015, and in 2021, thousands of opportunities were offered across 80 percent of our lines of business. Further, all our employees are required to complete unconscious bias and inclusion training, and can access expert-led courses on race, justice, allyship, and more. In addition, all our managers are required to take inclusive leadership training, and inclusion and diversity measures are built into our annual review process for leaders across Apple. For more than 30 years, Apple employees have found community and connection in our Diversity Network Associations (DNAs). These employee-led groups are rooted in the celebration and amplification of culturally underrepresented communities and are designed to engage and empower employees to connect with one another and to have a direct impact on the employee experience, our business, and the communities where we live and work, regardless of geography or job role. DNA memberships have doubled since the beginning
of 2020, and today, over 47,000 Apple employees across the globe belong to groups like Familia@Apple, the Apple Asian Association, the Apple Indian Association, Black@Apple, Indigenous@Apple, Pride@Apple, and Women@Apple, and a range of faith-based and cultural groups. Empowering communities. We are also committed to supporting and empowering communities around the world. In June 2020, Apple launched the Racial Equity and Justice Initiative (REJI), a long-term effort to help ensure more positive outcomes for communities of color across the country and help foster the next generation of inclusive leaders. We’ve committed $130 million to focus on three key areas: education, criminal justice, and economic empowerment. Apple Effective oversight. Inclusion and diversity is one of our Apple values, and we have a dedicated Vice President of Inclusion and Diversity working to develop and retain the world-class talent, at all levels, that reflects the communities we serve. In addition, we hold our leaders accountable by incorporating our Apple values and key community initiatives into our executives’ annual cash incentive program through an ESG Modifier. The inclusion of the ESG Modifier in our executives’ annual cash incentive program reflects our commitment to promoting values-driven leadership. In addition, as part of the Board’s oversight of corporate and product strategy, the Board and its committees also review and discuss with management Apple’s strategies and progress relating to these values, including updates from our Vice President of Inclusion and Diversity. Overall, we take a comprehensive approach to pay equity and representation, from our compensation planning processes designed to further equitable pay and representation to the internal policies and programs we’ve implemented to foster career growth, diversity, and inclusion. We believe that our methodology represents a more fulsome and effective approach to pay equity and representation than that set forth in the proposal, and we are proud of the progress we’ve achieved under our current framework. The unadjusted median pay gap measure requested in the proposal would only provide a comparison of two employees who share a particular gender, racial, or ethnic characteristic, but would not factor in the employee’s role, skills, performance, experience, tenure, or location, and therefore would not provide an accurate measurement of whether such employees are being fairly paid. Moreover, we already provide the percentage representation of women and people from underrepresented communities in leadership roles at Apple, and therefore the median ratio requested in the proposal would not provide meaningful supplemental information. We understand that single median pay gap figures may be helpful to jumpstart dialogue and processes at companies that have less mature frameworks in place or whose efforts have proven unproductive. However, given the maturity and robust quality of our internal processes and programs, our demonstrated progress and proven commitment to pay equity, and active Board oversight, we believe our current framework is more appropriate for Apple at this time. For all of the reasons above, the Board recommends a vote AGAINST Proposal No. 8.
Shareholder Proposal Civil Rights Audit
SUPPORTING STATEMENT Recently, the racial justice movement together with the disproportionate impacts of the COVID-19 pandemic have focused the public’s and policy makers’ attention on civil rights and gender and racial equity issues. Apple Yet, it is unclear how Apple plans to address racial inequality in its workforce. The company states that the overall number of Hispanic and Black employees in leadership increased by 90% and 60%, respectively, from 2014-2020, but Apple currently has no Hispanics and only one Black member on its executive team. Further, Hispanic and Black tech employees only account for 8% and 4% of all tech employees, respectively. Apple shut down three employee run surveys related to pay equity that focused on minorities and women. Nonetheless, achieving true racial and gender equity goes beyond just pay issues. In August 2021, Apple placed a female engineering programming manager on indefinite leave after she accused the company of sexism, harassment, and retaliation. Additionally, Apple hired Antonio García Martínez, who had a history of misogynistic and racist commentary, as an advertising platform engineer. While he was fired after a highly publicized employee petition, we believe that a civil rights audit could have identified the concerns raised by Apple’s employees far earlier. Civil rights issues raised by Apple’s products and services
stakeholders. We urge
Apple’s Statement in Opposition to Proposal No.
Our Board and governance structure fosters informed decision-making, monitoring of our compliance, and transparency at every level of our company. The Board,
We want everyone—from our customers to our industry peers—to know about our values, and the progress we’re making. Accordingly, we set goals, track progress, and measure our impact in these areas and report them publicly in a variety of ways, including through our:
Inclusion and Diversity At Apple, we’re building on our long-standing commitment to make our company more inclusive and diverse and to ensure equitable pay for all employees. We’re supporting underrepresented communities with Apple is strengthening our long-standing commitment to making our company more inclusive and diverse, and we’re making progress towards these goals. Between January 2020 and December 2020, 43 percent of open leadership roles and 29 percent of open R&D leadership roles were filled by people from underrepresented communities globally; and 37 percent of open leadership roles and 26 percent of open R&D leadership roles were filled by women globally. Leadership roles include managers at all levels of our company.
Between 2014 and 2020:
To build upon this growth, we’re focused on robust diversity recruiting efforts, ensuring our employees have access to career development programs and ongoing inclusion and diversity education, and gauging sentiment in areas like career development, manager performance, and inclusivity. All of our employees are required to complete unconscious bias and inclusion training, with additional training for Apple’s more than 15,000 managers on inclusive leadership. And inclusion and diversity measures are built into our annual review process for every leader, including those at the highest levels of the company. Additionally, we require our employees to be trained annually on Apple’s Business Conduct Policy,7 which incorporates our Human Rights Policy and sets out the fundamental principles of responsible business conduct that define the way we do business worldwide. For more than 30 years, Apple employees have found community and connection in our Diversity Network Associations (DNAs). These employee-led groups are rooted in the celebration and amplification of culturally underrepresented communities and are designed to engage and empower employees to connect with one another and to have a direct impact on the employee experience, our business, and the communities where we live and work, regardless of geography or job role. Today, over 47,000 Apple employees across the globe belong to groups like Familia@Apple, the Apple Asian Association, the Apple Indian Association, Black@Apple, Indigenous@Apple, Pride@Apple, and Women@Apple, and a range of faith-based and cultural groups. We believe that these employee-driven groups rooted in the celebration of multicultural communities provide members with the opportunity to connect, engage, and support their fellow colleagues from underrepresented groups. Apple’s DNA organizations provide insight far beyond internal culture. They also help us think about ways we can uniquely contribute to Apple’s products. The Photos team and the engineering teams collaborated with DNA teams regarding features like image color correction, resulting in the cameras on iPhone, iPad, and Mac being able to capture more natural-looking skin tones in video calls. Additionally, Apple has provided developers with guidelines to promote inclusion, including human interface and inclusive writing guidelines.8
We’re working to dismantle systemic racism and help grow opportunities for communities of color. Our work here doesn’t stop at our own doors.9 We are also committed to supporting and empowering communities around the world. Below are some highlights of our programs and initiatives:
Apple is collaborating with minority-serving institutions across the country to support the leadership of Historically Black Colleges and Universities (HBCUs), Hispanic-Serving Institutions (HSIs), Tribal Colleges and Universities (TCUs), and community colleges and other centers of learning in expanding educational access. We are partnering with stakeholders to support the Propel Center, resourcing preeminent organizations working to end mass incarceration and racial injustice. We are providing mentorship to founders who have historically been cut out of funding opportunities through our Impact Accelerator and significant financial investments to support businesses with diverse founders. We opened a Developer Academy in Detroit—the first of its kind in the United States—designed to empower young Black entrepreneurs, creators, and coders, helping them cultivate the skills necessary for jobs in the rapidly growing iOS app economy. We partner with external organizations such as AnitaB.org, FIRST, Girls Who Code, Hispanic Association of Colleges and Universities (HACU), and Human Rights Campaign (HRC), among others, to help break down systemic barriers and bias in research and development. Apple’s long-standing commitment to pay equity is externally evaluated by a third party.Since 2017, we have achieved gender pay equity globally, as well as pay equity by race and ethnicity in the United States. In every country where we operate, employees of all genders earn the same when engaging in similar work with comparable experience and performance. These metrics are assessed by a third-party firm that evaluates compensation across all of Apple using statistical modeling. This rigorous review considers annual total compensation, including base salary, bonuses, and RSUs, as well as a variety of data related to pay, including job level, location, performance ratings, and tenure. We are also committed to closing any pay gap we find at the intersections of gender and race and ethnicity in our U.S. workforce. To help ensure internal equity, we target diverse interview panels and candidate slates so diversity is reflected at every stage of the hiring process. Moreover, to avoid perpetuating any pay inequity created by previous companies, we do not ask candidates for compensation history, and our recruiters develop offers of employment based on the compensation of current Apple employees in similar roles. During our annual compensation planning process, the People team uses analytics to assess promotion rates, performance ratings distribution, and pay metrics for women compared to men and, in the United States, for underrepresented groups compared to non-underrepresented groups. We also seek to pay a highly competitive minimum wage in the United States, and provide all employees
opportunities for stock ownership in the company. And we hold our leaders accountable by incorporating Apple values and key community initiatives into our executives’ annual cash incentive program. Privacy We innovate to protect our customers’ privacy and continually assess our impact.We believe privacy is a fundamental human right, which is why we set the industry standard for minimizing data collection and build industry-leading transparency and controls into our technology. As part of our human rights commitments, we undertake Privacy Impact Assessments of our major products and services that take into consideration how laws Apple’s advertising platform does not track users; it does not link user or device data collected from our apps with user or device data collected from third parties for targeted advertising or advertising measurement purposes. We do not share any personally identifiable information with third parties, and no Apple Pay transactions or Health app data is accessible to Apple’s advertising platform, or is used for advertising purposes. All of these policies and practices, including the type of information Apple may use and how users can view such information, are explained on our “Apple Advertising and Privacy” page.12 This year, we launched App Tracking Transparency, which requires apps to ask permission when they want to track a user’s data across apps and websites owned by other companies. We also launched Privacy Nutrition Labels to help users understand how apps, including apps we develop at Apple, collect and handle their data.13 We are also committed to listening and learning from others’ perspectives and experiences and sharing our progress to advance meaningful change and find novel solutions to pressing challenges. For example, we previously announced plans for features intended to help protect children from predators who use communication tools to recruit and exploit them, and to help limit the spread of Child Sexual Abuse Material. Based on feedback from customers, advocacy groups, researchers, and others, we have decided to take additional As demonstrated above, Apple already fulfills the stated objective of the requested audit “to identify, remedy, and avoid adverse impacts on its stakeholders,” through our commitment to respect human rights, including civil rights such as those cited by the proponent, as outlined in our Human Rights Policy. We regularly engage with human rights and civil rights organizations, employees, customers, and other stakeholders to seek input and assess adverse impacts of our products, services, policies, and practices to advance meaningful change. Therefore, Apple believes that the audit requested by this proposal is For all of the reasons above, the Board recommends a vote AGAINST Proposal No.
Shareholder Proposal Report on Concealment Clauses RESOLVED: Shareholders of Apple Inc. (“Apple”) ask that the Board of Directors prepare a public report assessing the potential risks to the company associated with its use of concealment clauses in the context of harassment, discrimination and other unlawful acts. The report should be prepared at reasonable cost and omit proprietary and personal information. SUPPORTING STATEMENT: Concealment clauses are defined as any employment or post-employment agreement, such as arbitration, non-disclosure or non-disparagement agreements, that Apple asks employees or contractors to sign which would limit their ability to discuss unlawful acts in the workplace, including harassment and discrimination. WHEREAS: Apple wisely uses concealment clauses in employment agreements to protect corporate information, such as intellectual capital and trade secrets. However, Apple has not excluded from these clauses their workers’ rights to speak openly about harassment, discrimination and other unlawful acts. Given this, investors cannot be confident in their knowledge of Apple’s workplace culture. A healthy workplace culture is linked to strong returns. McKinsey found that companies in the top quartile for workplace culture post a return to shareholders 60 percent higher than median companies and 200 percent higher than organizations in the bottom quartile.1 A study by the Wall Street Journal found that over a five-year period, the 20 most diverse companies in the S&P 500 had an average annual stock return that was almost six percentage points higher than the 20 least diverse companies.2 A workplace that tolerates harassment invites legal, brand, financial and human capital risk. Companies may experience reduced morale, lost productivity, absenteeism and challenges in attracting and retaining talent.3 Employees who engage in harmful behavior may also be shielded from accountability. In California, forthcoming4 and existing legislation prohibit concealment clauses in employment agreements involving recognized forms of discrimination and unlawful activity. Apple works under a patchwork of state laws related to the use of concealment clauses and may benefit from consistent practices across all employees and contractors.
As hundreds of employees stopped work in protest5,6 and after years of binding employees who settled discrimination claims to concealment agreements,7 Pinterest paid $22.5 million to settle a gender discrimination lawsuit brought by a former executive. Shareholders ultimately sued Pinterest executives alleging a breach of fiduciary duty by “perpetrating or knowingly ignoring the long-standing and systemic culture of discrimination and retaliation.”8 Similarly, in 2020, as part of a $300 million settlement of shareholder lawsuits alleging the company created a toxic work environment, Alphabet agreed to limit confidentiality restrictions associated with harassment and discrimination cases.9 Investors have reason to be concerned with Apple, where allegations that the company retaliated against employees complaining of discrimination and potential labor law violations10 have led workers to organize under the banner #AppleToo.11,12
Apple’s Statement in Opposition to Proposal No. 10
Board oversight. Apple’s Board and its committees review and discuss with management matters related to our employees, including, among other things, Apple’s commitments and progress towards inclusive and diverse representation among our employees, employee engagement, and business conduct and compliance. Apple recognizes and supports the rights of our employees and contractors to speak openly about harassment, discrimination, and other unlawful acts in the workplace. The report requested by the proposal on the potential risks to the company associated with its use of “concealment clauses” as defined by the proposal is unnecessary as Apple’s existing policies, active Board oversight, and public disclosures effectively address the issues targeted by this proposal. For all of the
Identification of Proponents
Apple knows of no other matters to be submitted to shareholders at the Annual Meeting, other than the proposals identified in this Proxy Statement. If any other matters properly come before shareholders at the Annual Meeting, it is the intention of the persons named on the proxy to vote the shares represented thereby on such matters in accordance with their best judgment.
Information This section includes the Audit and Finance Committee Report, information about stock ownership and our equity compensation plans, and other general information.
Audit and Finance Committee Report As of October 25, The Audit and Finance Committee assists the Board’s oversight and monitoring of:
The Audit and Finance Committee does not itself prepare financial statements or perform audits, and its members are not auditors or certifiers of Apple’s financial statements. The Audit and Finance Committee is responsible for the appointment, compensation, retention, and oversight of the work performed by Apple’s independent registered public accounting firm, Ernst & Young LLP. In fulfilling its oversight responsibility, the Audit and Finance Committee carefully reviews the policies and procedures for the engagement of the independent registered public accounting firm, including the scope of the audit, audit fees, auditor independence matters, performance of the independent auditors, and the extent to which the independent registered public accounting firm may be retained to performnon-audit services. Apple maintains an auditor independence policy that, among other things, prohibits Apple’s independent registered public accounting firm from performingnon-financial consulting services, such as information technology consulting and internal audit services. This policy mandates that the Audit and Finance Committee approve in advance the audit and permissiblenon-audit services to be performed by the independent registered public accounting firm and the related budget, and that the Audit and Finance Committee be provided with quarterly reporting on actual spending. This policy also mandates that Apple may not enter into engagements with Apple’s independent registered public accounting firm fornon-audit services without the expresspre-approval of the Audit and Finance Committee. The Audit and Finance Committee has reviewed and discussed the audited financial statements for the year ended September The Audit and Finance Committee also has received and reviewed the written disclosures and the letter from Ernst & Young required by applicable requirements of the PCAOB regarding Ernst & Young’s communications with the Audit and Finance Committee concerning independence, and has discussed with Ernst & Young its independence. Based on the reviews and discussions referred to above, the Audit and Finance Committee recommended to the Board that the financial statements referred to above be included in Apple’s Annual Report on Form10-K for the year ended September
Security Ownership of Certain Beneficial Owners and Management The following table shows information as of January
Equity Compensation Plan Information The following table shows information, as of September
2022 Annual Meeting of Shareholders
The Record Date for the Annual Meeting is January You are invited to vote on the proposals described in this Proxy Statement because you were an Apple shareholder on the Record Date, January Apple is soliciting proxies for use at the Annual Meeting, including any postponements or adjournments. In the interest of saving time and money, Apple has opted to provide Attending the Annual Meeting We are pleased to welcome shareholders to To
No recording of the Annual Meeting is allowed, Even if you
In the event of technical difficulties with the Annual Meeting, we expect that an announcement will be made on www.virtualshareholdermeeting.com/AAPL2022. If necessary, the announcement will provide updated information regarding the date, time, and location of the Annual Meeting. Any updated information regarding the Annual Meeting will also be posted on our Investor Relations website at investor.apple.com. Proxy Materials These materials were first sent or made available to shareholders on January
The Notice of 2022 Annual Meeting of Shareholders
This Proxy Statement for the Annual Meeting
Apple’s Annual Report on Form 10-K for the year ended September 25, 2021 If you requested printed versions by mail, these printed proxy materials also include the proxy card or voting instruction form for the Annual Meeting. Forward-looking statements. The information covered by this Proxy Statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our environmental, social, and governance goals, commitments, and strategies. These statements involve risks and uncertainties, and actual results may differ materially from any future results expressed or implied by the forward-looking statements, including any failure to meet stated goals and commitments, and execute our strategies in the time frame expected or at all, as a result of many factors, including changing government regulations, and our expansion into new products, services, technologies, and geographic regions. More information on risks, uncertainties, and other potential factors that could affect our business and performance is included in our other filings with the SEC, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. We assume no obligation to update any forward-looking statements or information, which speak as of their respective dates. Proxy Materials are Available on the Internet Apple uses the internet as the primary means of furnishing proxy materials to shareholders. We are sending a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) to our shareholders with instructions on how to access the proxy materials online at proxyvote.comor request a printed copy of the materials. Shareholders may follow the instructions in the Notice of Internet Availability to elect to receive future proxy materials in print by mail or electronically by email. We encourage shareholders to take advantage of the availability of the proxy materials online to help reduce the environmental impact of our annual meetings and reduce Apple’s printing and mailing costs. Apple’s proxy materials are also available atinvestor.apple.com.
Eliminating Duplicate Mailings Apple has adopted a procedure called “householding.” Under this procedure, Apple may deliver a single copy of the Notice of Internet Availability and, if you requested printed versions by mail, this Proxy Statement and
To receive, free of charge, a separate copy of the Notice of Internet Availability and, if you requested printed versions by mail, this Proxy Statement or the Annual Report on Form 10-K for the year ended September Apple Investor Relations One Apple Park Way MS927-4INV Cupertino, CA 95014 USA Phone: (408)974-3123 Email:investor_relations@apple.com If you are receiving more than one copy of the proxy materials at a single address and would like to participate in householding, please contact the bank, broker, or other organization that holds your shares to request information about eliminating duplicate mailings. Quorum for the Annual Meeting Holders of a majority of the shares entitled to vote at the Annual Meeting must be present at the Annual Meeting
You are entitled to vote and you are present at the Annual Meeting; or
You have properly voted prior to the meeting by proxy online, by phone, or by submitting a proxy card or voting instruction form by mail. Brokernon-votes and abstentions are counted for purposes of determining whether a quorum is present. If a quorum is not present, we may propose to adjourn the Annual Meeting Inspector of Election A representative of Broadridge Investor Communication Solutions, Inc. will serve as the inspector of election.
Proxy Solicitation Costs Apple is paying the costs of the solicitation of proxies. Apple has retained Georgeson LLC to assist in the distribution of proxy materials and the solicitation of proxies from individual shareholders as well as brokerage firms, fiduciaries, custodians, and other similar organizations representing beneficial owners of shares for the Annual Meeting. We have agreed to pay Georgeson a fee of approximately In addition to solicitations by mail, the proxy solicitor and Apple’s directors, officers, and employees, without additional compensation, may solicit proxies on Apple’s behalf in person, by phone, or by electronic communication.
Apple’s Fiscal Year Apple’s fiscal year is the52- or53-week period that ends on the last Saturday of September. Apple’s Each share of Apple’s common stock has one vote on each matter. Only “shareholders of record” as of the close of business on the Record Date are entitled to vote at the Annual Meeting. As of the Record Date, there were Shareholders of Record.If your shares are registered directly in your name with Apple’s transfer agent, Computershare Trust Company, N.A., you are the shareholder of record with respect to those shares. Beneficial Owners of Shares Held in Street Name.If your shares are held in an account at a bank, broker, or other organization, then you are the “beneficial owner of shares held in street name.” As a beneficial owner, you have the right to instruct the person or organization holding your shares how to vote your shares. Most individual shareholders are beneficial owners of shares held in street name. There are four ways to vote:
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